Australian (ASX) Stock Market Forum

Oil price discussion and analysis

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Hurricane Ian downgraded and heads East. A mess for the residents, but at least all the oilfields to west were spared.

Will the POO break out of its daily trend range, or is the bottom in for now?
I was quite surprised it got so low... as was OPEC apparently.
5 hourly
Screenshot_20220929-202709.png

Daily
Screenshot_20220929-202732.png
 
thanks to Mr @ducati916 :
1665093721840.png
so we reach a new low of strategic reserves at the level of 1980s...all that to try to support USD and wage a war against Putin..
I let you judge of the success when filling up...
More worrying, you will remember that our own Australian strategic reserves are virtual ones LOL..aka a paper signed by the USA.
So if we get a blockade, the USA will send us the fuel we need at the end of the month to run our ambulances and fire trucks
Yes I know, but bipartisans and elected by you guys..
Now, even wo blockade, if US reserves are halved ..what about our "part"?...just saying
Next time your servo pumps run empty, be proud it is part of our effort to help the US ....
 
apnews.com

EXPLAINER: What's the effect of Russian oil price cap, ban?

The U.S., Europe and the Group of 7 democracies have agreed to put a price cap on Russian oil exports to other countries. The cap proposed by U.S.
apnews.com apnews.com

EXPLAINER: What’s the effect of Russian oil price cap, ban?​

By DAVID McHUGH

FRANKFURT, Germany (AP) — Western governments are aiming to cap the price of Russia’s oil exports in an attempt to limit the fossil fuel earnings that support Moscow’s budget, its military and the invasion of Ukraine.

The cap is set to take effect on Dec. 5, the same day the European Union will impose a boycott on most Russian oil — its crude that is shipped by sea. The EU was still negotiating what the price ceiling should be.

The twin measures could have an uncertain effect on the price of oil as worries over lost supply through the boycott compete with fears about lower demand from a slowing global economy.

Here are basic facts about the price cap, the EU embargo and what they could mean for consumers and the global economy:

WHAT IS THE PRICE CAP AND HOW WOULD IT WORK?

U.S. Treasury Secretary Janet Yellen has proposed the cap with other Group of 7 allies as a way to limit Russia’s earnings while keeping Russian oil flowing to the global economy. The aim is to hurt Moscow’s finances while avoiding a sharp oil price spike if Russia’s oil is suddenly taken off the global market.

Insurance companies and other firms needed to ship oil would only be able to deal with Russian crude if the oil is priced at or below the cap. Most of the insurers are located in the EU or the United Kingdom and could be required to participate in the cap. Without insurance, tanker owners may be reluctant to take on Russian oil and face obstacles in delivering it

HOW WOULD OIL KEEP FLOWING TO THE GLOBAL ECONOMY?

Universal enforcement of the insurance ban, imposed by the EU and U.K. in earlier rounds of sanctions, could take so much Russian crude off the market that oil prices would spike, Western economies would suffer, and Russia would see increased earnings from whatever oil it can ship in defiance of the embargo.

Russia, the world’s No. 2 oil producer, has already rerouted much of its supply to India, China and other Asian countries at discounted prices after Western customers shunned it even before the EU ban.

One purpose of the cap is to provide a legal framework “to allow the flow of Russian oil to continue and to reduce the windfall revenue for Russia at the same time,” said Claudio Galimberti, a senior vice president of analysis at Rystad Energy.

“It is essential for the global crude markets that Russian oil still finds markets to be sold, after the EU ban is operative,” he added. “In the absence of that, global oil prices would skyrocket.”

WHAT EFFECT WOULD DIFFERENT CAP LEVELS HAVE?

A cap of between $65 and $70 per barrel could let Russia keep selling oil and while keeping its earnings to current levels. Russian oil is trading at around $63 per barrel, a considerable discount to international benchmark Brent.

A lower cap — at around $50 per barrel — would make it difficult for Russia to balance its state budget, with Moscow believed to require around $60 to $70 per barrel to do that, its so-called “fiscal break-even.”

However, that $50 cap would be still be above Russia’s cost of production of between $30 and $40 per barrel, giving Moscow an incentive to keep selling oil simply to avoid having to cap wells that can be hard to restart.

WHAT IF RUSSIA AND OTHER COUNTRIES WON’T GO ALONG?

Russian has said it will not observe a cap and will halt deliveries to countries that do. A lower cap of around $50 could be more likely to provoke that response, or Russia could halt the last of its remaining natural gas supplies to Europe.

China and India might not go along with the cap, while China could form its own insurance companies to replace those barred by U.S., U.K. and Europe.

Galimberti says China and India are already enjoying discounted oil and may not want to alienate Russia.

“China and India get Russia’s crude at a huge discount to Brent, therefore, they don’t necessarily need a price cap to continue to enjoy a discount,” he said. “By complying with the cap set by the G-7, they risk alienating Russia. As a result, we do believe that the compliance with the price cap would not be high.”

Russia could also turn to schemes such as transferring oil from ship to ship to disguise its origins and mixing its oil with other types to skirt the ban.

So it remains to be seen what effect the cap would have.

WHAT ABOUT THE EU EMBARGO?

The biggest impact from the EU embargo may come not on Dec. 5, as Europe finds new suppliers and Russian barrels are rerouted, but on Feb. 5, when Europe’s additional ban on refinery products made from oil — such as diesel fuel — come into effect.

Europe will have to turn to alternative supplies from the U.S., Middle East and India. “There is going to be a shortfall, and this will result in very high prices,” Galimberti said.

Europe still has many cars that run on diesel. The fuel also is used for truck transport to get a huge range of goods to consumers and to run agricultural machinery — so those higher costs will be spread throughout the economy
 
It would appear that some volatility is on the cards for Oil. The Saudi cousins are threatening Wall St. whose short sellers have been holding the price low since Opec last met and Abdulaziz bin Salaman ABS, the oil minister of the kingdom is not pleased. From the WSJ today.

VIENNA—More than any other Saudi energy minister, Prince Abdulaziz bin Salman has waged war against oil-market speculators.

As the world’s biggest oil producers gather here Sunday to decide on a production plan, the spotlight is on the cartel kingpin’s fixation on Wall Street short sellers. Abdulaziz has lashed out repeatedly this year against traders whose bets can cause prices to fall. Last week he warned them to “watch out,” which some analysts saw as an indication that the Organization of the Petroleum Exporting Countries and its allies may reduce output at their June 4 meeting. A production cut of up to 1 million barrels a day is on the table, delegates said Saturday.
Click to expand...

As with all matters of risk, price moves will all be quite obvious after the fact, but ASF members who have stocked up on oilers will feel more comfortable after this news heading in to the week. What is not good for the overseas cousins of Australians is often good for the "lucky country". At least it was before Australian governments began kicking miners and extractors of minerals and oil with messy taxes on the run and chasing kudos for being greener than green in the wash.

gg
 
FWIW, I noticed that most of the oil producing countries monthly production levels were down on previous month. Except for Iran or Iraq, can't remember, which was slightly up.
If Biden hasn't stocked the reserves up yet, I'm not sure he will get the chance again under the $70 WTI price point.
OPEC will squeeze along with the petrodollar vandalism
 
frugal.rock said:
If Biden hasn't stocked the reserves up yet
Click to expand...
It's only about 51% full at the moment.

Chart from Energy Information Administration (US Government):

1685885171135.png

Speculating but I have doubts it'll ever be filled to capacity again. If they couldn't get organised to fill it during 2020 when the oil price crashed and even went negative then there's not much chance it'll be filled anytime soon is my thinking.
 
We've had 2 productions cuts announced by OPEC+ and WTI crude is now sitting at $69. Commentators offering mixed reasons as to why - either oil markets are pricing in an upcoming recession (other tha Eurozone?) or they're reacting to the possibility that Iran may soon be allowed to export (fool me once?)

oilprice.com

Mixed Data Keeping Oil Markets On Edge | OilPrice.com

Oil markets have become highly volatile in the current week as traders try to make sense of a mix of both bullish and bearish drivers
oilprice.com oilprice.com
 
divs4ever said:
a farm i used to be on used it to paint the ( wooden ) fence posts and that was in the '80s
Click to expand...
I still use it and many do when doing corner posts, using sump oil from mower etc in the hole before putting the post.
Helps again termite and rot.
I know there are some heavy metals but is it worse than arsenic which was used in treated pine logs up to very recently
 
gave up long ago trying to make sense of conniptions. This article seems fairly informed.
.
A week ago, no one anticipated the sudden uncertainty gripping the oil markets. The steadfast support for production cuts within the OPEC+ group appeared unshakable, with little indication of any discord before the widely expected meeting on Sunday to extend production cuts into the new year.

However, fast forward seven days, and that solidarity has crumbled, contributing to a fourth consecutive weekly drop in oil prices, exacerbated by lackluster trading in Friday's post-Thanksgiving session.

All eyes are now fixed on Thursday's virtual meeting in Vienna, where Saudi Arabia is leading the push to dissuade undisclosed African producers from exceeding their quotas and cheating by producing more than agreed upon.

African OPEC members are advocating for higher production quotas, while Saudi Arabia, which has voluntarily reduced output by one million barrels per day, seeks further production cuts from the group. The issue of non-compliance with agreed production quotas has been an enduring problem for OPEC.

This latest rift has clearly unsettled Saudi Arabia and its Russian counterparts, who are striving to elevate prices. However, their efforts are hamstrung by a combination of ample supply, particularly from the United States, and weak demand. Moreover, the prospect of reduced consumption in the coming year looms if the global economy continues to decelerate.

As a result, both US West Texas Intermediate (WTI) and global Brent crude ended lower on Friday, reflecting uncertainty surrounding the solidarity of the OPEC+ cartel as African nations clamor for higher quotas amid falling prices due to weakening demand.

WTI crude oil for January delivery closed down $1.56 to settle at $75.54 per barrel, while January Brent crude, the global benchmark, concluded down 84 cents at $80.58. Both crudes ended the week down less than 1%.

The division within the 23-member group has intensified the pressure on oil prices, which have slumped 18% since their peak on September 27. This decline can be attributed to dwindling demand in developed economies, driven by high interest rates, coupled with rising production from non-OPEC+ countries, particularly the record-breaking output of 13.2 million barrels per day from the United States.

Despite the recent discord, some believe that OPEC unity will ultimately prevail. Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, expressed in a note that the current collective and unilateral cuts are likely to be extended, with a deeper reduction requiring further negotiation.

Reports from Bloomberg and Reuters indicate that Nigeria, Angola, and Congo are seeking increased production quotas, while Saudi Arabia is urging other members to lower production to bolster prices. To maintain unity, Saudi Arabia may need to negotiate by raising quotas for smaller producers and absorb the additional barrels through an increase in its voluntary cut.

Adding to the challenges are the ongoing rises in US oil stocks. The Energy Information Administration reported an 8.7-million-barrel increase in US inventories last week, with production remaining steady at 13.2 million barrels per day. Weakness in the US domestic oil market, exacerbated by declining demand from refineries and unfavorable refining margins, further contributes to the bearish sentiment.

In another development, US drillers increased their active rig count for the second consecutive week. Baker Hughes data revealed a four-rig uptick in the five-day period from November 18 to November 22. Although US oil rig numbers held steady at 500, gas rigs increased by three to 117. While the oil rig count averaged a decrease of four in November, gas rig numbers remained stable. Despite the recent increases, the total US rig count remains significantly lower than the previous year, with a 21% decline.

These shifting dynamics and uncertainties are casting a shadow over the oil markets, leaving observers eager to see the outcome of Thursday's critical OPEC+ meeting and its potential impact on oil prices,
.
cheats they will forever be. There are too many inputs .. demand responses, politics, national interest, war, currency, .. to try and get a position that makes sense.
 

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