Oil price discussion and analysis

[Smurf1976]

The US release of strategic reserves is SOOOOOO insignificant to the daily US or global current supply/demand.it will have a blip of affect on the oil price.

Agreed but realistically it's more than any other single measure is likely to do in practice.

1 million barrels per day from the SPR for six months seems to be what they're suggesting.

Versus 0.432 million barrels per day just announced by OPEC (and not really a new announcement anyway) with the reality that in recent times OPEC has underdelivered on output hikes so the real increase will likely be somewhat less.

A related issue with OPEC is that of spare capacity and how much they can really produce? There'd be few if any people on the planet who know the actual truth there as a whole given that OPEC itself can really only take its own members' word for it and nobody audits this stuff.

What can be said though is that looking at recent data, a number of OPEC members are failing to meet quotas which suggests they're maxed out so far as their actual usable production is concerned. Not all, there's some that are doing it so clearly have had spare, but some are struggling.

 

[Smurf1976]

There is of course a good side to this:

 

[Garpal Gumnut]

The US release of strategic reserves is SOOOOOO insignificant to the daily US or global current supply/demand.it will have a blip of affect on the oil price.
I don’t know if POO will go down or up in the short /medium time. But the US reserves release will not have any significant effect.
Gunnerguy.

Just now.



I'm happy.

gg

 

[JohnDe]

Unprecedented US oil release to ‘make a difference’

US President Joe Biden will tap up to 180 million barrels of government oil reserves to help tamp down near-record high fuel prices, an unprecedented government intervention into oil markets following Russia’s invasion of Ukraine

In remarks from the White House on Thursday (US time), Mr Biden framed high energy prices as a wartime issue that requires a robust and wide-ranging response.

The oil release – about 1 million barrels a day for six months, starting in May – would be the biggest-ever drawdown from the country’s emergency stockpile of roughly 568 million barrels

Mr Biden said he would also invoke the Defence Production Act – a Korean War-era national security mobilisation law – to boost domestic output of minerals used in batteries for electric vehicles and other clean-energy technology

And he called on Congress to pass a new law that would push oil companies to drill faster when they have leases on federal lands, including by imposing fees on companies for unused leases

“The action I’m calling for will make a difference over time,” Mr Biden said

“But the truth is it takes companies months, not days to increase production … This is a wartime bridge to increase oil supply until production ramps up later this year.

Mr Biden’s remarks drew criticism from the oil industry, which said that he unfairly blamed US energy companies for not pumping more oil in response to shortages stemming from the Russian invasion and the economic rebound from the Covid-19 pandemic

“The best thing the White House can do right now is to remove barriers to investment in American energy production and infrastructure,” Mike Sommers, leader of the American Petroleum Institute, said in a statement.

“Unfortunately, today we heard more mixed signals about developing affordable, reliable and secure American natural gas and oil.

Charging companies for unused leases would only add to rising costs that oil producers face due to inflation and supply-chain delays, said Tyler Glover, chief executive of Texas Pacific Land Corp., a big landowner in the Permian Basin in West Texas.

The Biden administration has also repeatedly asked the Organisation of the Petroleum Exporting Countries to speed up production increases, which the cartel has repeatedly rejected. OPEC decided again Thursday to stick with a production plan it has arranged with Moscow in which members will raise their collective oil output by a modest 432,000 barrels a day.

 

[over9k]

Posted this in the inflation thread too but the two are obviously quite interlinked. Well worth a watch.

 

[JohnDe]

Posted this in the inflation thread too but the two are obviously quite interlinked. Well worth a watch.

Pretty much the same as it has always been.

Yes, countries releasing there reserves this year are going to have to replenish next year. Meaning that they may cause the price to stay high because of increased demand. However, if prices fluctuate the purchases could be made when on the low side and stopped as it increases. It wasn't long a go when oil prices where in the negative.

Shale production, the President is asking a lot for companies to ramp up production immediately. First there is labour shortages, wells have been capped will require workers and time to put back into production, prices a fluctuating too much to ensure a profit will be made once the extra sites are up and running, other oil nations are increasing supply, which could reduce prices.

Perfect storm?

What all this leads to is massive investment and development of alternative energy sources and storage. Watch the prices of materials for electrics and batteries.

 

[over9k]

Pretty much the same as it has always been.

Yes, countries releasing there reserves this year are going to have to replenish next year. Meaning that they may cause the price to stay high because of increased demand. However, if prices fluctuate the purchases could be made when on the low side and stopped as it increases. It wasn't long a go when oil prices where in the negative.

Shale production, the President is asking a lot for companies to ramp up production immediately. First there is labour shortages, wells have been capped will require workers and time to put back into production, prices a fluctuating too much to ensure a profit will be made once the extra sites are up and running, other oil nations are increasing supply, which could reduce prices.

Perfect storm?

What all this leads to is massive investment and development of alternative energy sources and storage. Watch the prices of materials for electrics and batteries.

You'd think the government could promise to buy X amount at A price, Y amount at B price, Z amount at C price etc etc as reserve topups to give the oil companies some kind of certainty.

It strikes me as lunacy not to both A: top the reserves up if prices drop and B: not promise to do so as well, but there could be more going on than I know about.

 

[JohnDe]

You'd think the government could promise to buy X amount at A price, Y amount at B price, Z amount at C price etc etc as reserve topups to give the oil companies some kind of certainty.

It strikes me as lunacy not to both A: top the reserves up if prices drop and B: not promise to do so as well, but there could be more going on than I know about.

Are you saying that the government should force the seller to sell at a certain price?

 

[over9k]

Are you saying that the government should force the seller to sell at a certain price?

Well they could, but no. I'm saying the producers aren't going to want to up capacity without some kind of assurance that there will actually be a market for said capacity. If the government promised to refill the reserves at price X (which bolsters demand) then that would obviously be quite a large carrot and create a bit of a price floor for the producers.

So if producers wanted a floor of $80/barrel to up production capacity then the government could promise to buy X million barrels at that price at whatever moment the market rate gets to that point.

The stick approach is the fact that biden has the power to unilaterally ban all U.S oil exports which would relegate U.S producers to a domestic market only and at around $70/barrel. Simply threatening to do this could be the stick necessary to refill the reserves cheaply.

 

[Smurf1976]

It strikes me as lunacy not to both A: top the reserves up if prices drop and B: not promise to do so as well, but there could be more going on than I know about.

My thinking is simply that they won't actually do it regardless of what opportunities they might have.

The US hasn't replaced the drawdown in 2011 yet and that's despite having had Presidents from both parties during that time and an oil price crash as well.

Hence my thinking that once it's drawn out, it'll very likely never be refilled or at least not in a timeframe relevant to discussion today.

That is just an assumption in my part though looking at the past 11 years. Politics will no doubt come into it.

Data is here: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCSSTUS1&f=M

 

[over9k]

My thinking is simply that they won't actually do it regardless of what opportunities they might have.

The US hasn't replaced the drawdown in 2011 yet and that's despite having had Presidents from both parties during that time and an oil price crash as well.

Hence my thinking that once it's drawn out, it'll very likely never be refilled or at least not in a timeframe relevant to discussion today.

That is just an assumption in my part though looking at the past 11 years. Politics will no doubt come into it.

Data is here: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCSSTUS1&f=M

Seems unnecessary seeing as all the production is now onshore I agree, but still, if there's going to be more events like this they could at least use it to smooth prices out a bit.

 

[qldfrog]

And preaching to convert:
https://panatimes.com/the-man-who-will-kill-the-us-dollar
And the interactions USD POO and also POG... interesting times

 

[qldfrog]

At a loss of a good thread for this link...
Loosely related to oil cocoal infustry conversion.
Anyone free to move to a better location
:
The wet dream that Australia will become the H2 provider of the world with FMG turning into a tree hugging saviour is to face a rude shock
https://theconversation.com/austral...to-asian-markets-but-they-dont-need-it-179381

 

[rederob]

Bottom was in last week, so after a bit of equivocation yesterday we have now got POO pivoting to the upside:

If 2022's trend continues then we see this rise headed over $120/bbl.
North American drillers are not especially keen to ramp up output despite a sustained high POO:

So with Biden releasing oil from strategic reserves for the time being, and those oils needing to be replaced, then the good times for producers look set for months ahead.

 

[frugal.rock]

There's plenty of reports emerging regarding fuel switching from gas to oil in some countries due to the situation with natural gas and that's going to put upward pressure on oil consumption so long as it remains the cheaper option for firing boilers and so on.

Weekly. Might be chopping and changing between sources lately Smurf?
Looks like gas is going for another harder run.

POO? Expecting to see it head lower for a little while, before it resumes an uptrend again.

I wouldn't be surprised to see $80 tested, $90 probably a given.
I'm giving this corrective pricing pattern time to play out properly (a few weeks, even months, perhaps?), before expecting a resumption of longer term trend.
Poo's recent "stiff peaks" (seen on weekly as ranging bars) have been over whipped the last few weeks by the "entities" and geo fears, but reality is melting it down again.
AEI announcements in coming days will, imo, dampen prices.
I'm trying to drive as little as possible these days.
Don't think it's a "Zoolander" style bowser fest going on out there, like it was mid 2020, if you had dared to leave your home that is!...? ?

"A Model, Idiot?" haha.

 

[qldfrog]

And this has real life impact from sri Lanka to americas..
https://www.reuters.com/world/ameri...five-fuel-price-rises-stoke-anger-2022-04-06/

And give it 3 to 6 months and we will have hunger riots.. oil IS food

 

[CityIndex]

I wouldn't be surprised to see $80 tested, $90 probably a given.
I'm giving this corrective pricing pattern time to play out properly (a few weeks, even months, perhaps?), before expecting a resumption of longer term trend.

The IEA’s decision to bolster the US’s oil release adds to the bearish pressure being created by the Covid surge in China, so you may very likely be correct in expecting a bigger decline.

The break below the key psychological $100 level and uptrend support coming from early December really opens the door for this, especially as volume was higher on the day.

However, volatility is likely to continue as price remains closely tied with headlines relating to Russia, so it’s important to keep in mind that all trading carries risk as there’s no telling what the next development will be.

 

[Garpal Gumnut]

Weekly. Might be chopping and changing between sources lately Smurf?
Looks like gas is going for another harder run.
View attachment 140057
View attachment 140058

I wouldn't be surprised to see $80 tested, $90 probably a given.
I'm giving this corrective pricing pattern time to play out properly (a few weeks, even months, perhaps?), before expecting a resumption of longer term trend.
Poo's recent "stiff peaks" (seen on weekly as ranging bars) have been over whipped the last few weeks by the "entities" and geo fears, but reality is melting it down again.
AEI announcements in coming days will, imo, dampen prices.
I'm trying to drive as little as possible these days.
Don't think it's a "Zoolander" style bowser fest going on out there, like it was mid 2020, if you had dared to leave your home that is!...? ?

"A Model, Idiot?" haha.

The IEA’s decision to bolster the US’s oil release adds to the bearish pressure being created by the Covid surge in China, so you may very likely be correct in expecting a bigger decline.

The break below the key psychological $100 level and uptrend support coming from early December really opens the door for this, especially as volume was higher on the day.

However, volatility is likely to continue as price remains closely tied with headlines relating to Russia, so it’s important to keep in mind that all trading carries risk as there’s no telling what the next development will be.

I must admit @frugal.rock and @CityIndex that the POO is extremely volatile.

I do not share the hope that Brent will fall to $80.

The recent chart indicates it is still rising and unless it gets lower highs and a lower low from the technical view it is still a bullish proposition.

Fundamentally the Western Europeans need more oil and gas to avoid a recession and it would seem that less will come from Russia.

The USA under the Democrats will not be able to reposition quickly and the release of their reserves is a pittance, so in terms of the Aussie Dollar, even if the Petrodollar aka $USD is worth less our petroleum assets will appreciate.

As to the Saudis, Iranians, Chinese and Russians, their supply and demand, who knows?

Uncertainty increases prices generally.

gg

 

[frugal.rock]

I do not share the hope that Brent will fall to $80.

Surely you'd like to fill the Arnage up at lower prices GG ?
I don't follow Brent. Just WTI.
I have no oilers on the books at the moment.
Have noticed the biggest spread between WTI and Brent lately that I have ever seen. (not offering any take aways on that...don't have any?, apart from the obvious)

I dunno Mr Gumnut, it's just the vibe, and the rising peaks and subsequent dropoffs over a longer term chart has me thinking this recent volatility may settle into some form of regularity again, but geo factors may keep playing it?
With the chop, either way play.

Just because I have an opinion on something, doesn't mean it's correct and going to play out the way I think. It's just when it does, the trade plan is triggered.
Oil and coal, such filthy products that traders are loving at the moment...?
Cheers.

 

[Garpal Gumnut]

I don't know if any ASF members have ever been in an Oil Crisis similar to that following the 6 Day War between Israel and the Arab States. It was a time of wild fluctuations in price, pushing cars in to servos and fisticuffs even between godbotherers who would normally just say a prayer, do the hokey pokey,, hop on a mat or chant oooom.

We have less Oil now than then and greater consumption ergo a repeat of the 70's is upon us.

Nonetheless the IEA has released more stores of Oil but there is a catch, the Oil released from the US reserves is included.

So the Oil price fell and is now recovering.

Get ready to forget god and push your cars.

https://oilprice.com/Latest-Energy-...grees-To-120-Million-Barrels-SPR-Release.html

gg