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drbubb

OIL PRICES: could stay down thru 2016-19

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World’s No.1 Oil Trader: U.S. To See Final Oil Output Spike In 2018

The best is yet to come for US oil production—but it will be a short-lived hurrah, according to Ian Taylor, head of oil trading giant Vitol.

US oil production has steadily increased throughout 2017 as US drillers regained their footing after the oil price crash. What started out at 8.946 million bpd of crude oil production in the first week of January has now reached an average of 9.561 million bpd as of September 29, according to the EIA.

The EIA is expecting US oil production to reach 9.8 million bpd in 2018, according to the latest Short Term Energy Outlook.

US crude oil exports, too, have taken the world by storm, particularly over the last couple of weeks, as traders seize an opportunity created by the extra wide spread between WTI and Brent, which as of the latter part of September, reached $7 per barrel, according to data provided by S&P Global Platts.

These US exports are now flooding the global market—a global market that is still oil-heavy as OPEC members—well, most OPEC members—continue to dutifully curb oil production to alleviate the overhang. That overhang is smaller today than it was in December 2016—in fact, 130 million barrels smaller, according to OPEC Secretary General Mohammad Barkindo, but is still 171 million barrels too heavy as of August.

Still, Vitol feels that the current U.S. crude oil production growth is unsustainable beyond 2018.

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$100 Oil Is Back On The Table

Barrels

Oil prices will rise to $100 per barrel if Saudi Arabia gets its way.

Only a week ago, news surfaced that Saudi officials were quietly hoping to push oil prices up to $80 per barrel, which would help boost the valuation of Saudi Aramco IPO. But why not $100 per barrel?

Reuters reports that Riyadh would be fine with prices rising that far, which lends weight to the notion that OPEC will keep the production cuts in place even as its mission to drain surplus oil inventories around the world appears to be largely “accomplished.”

OPEC and its non-OPEC partners are even considering yet another extension that would push the cuts into the middle of 2019. But with inventories back to average levels and expected to fall for the foreseeable future, the production limits would surely push the market into a deficit. The over-tightening, presumably, would lead to higher oil prices…just in time for the Aramco IPO.

OPEC just posted its fifth consecutive month in which it recorded a new record high compliance rate with the production limits. In March, according to Bloomberg, the compliance rate surged to 164 percent, a new high, up from 148 percent in February. Unsurprisingly, output fell in Venezuela, but Saudi Arabia also chipped in further reductions.

Two industry sources told Reuters that behind closed doors, Saudi officials have considered $80 per barrel, or even $100 per barrel, as sort of unofficial price targets. “We have come full circle,” a third high-level industry source told Reuters. “I would not be surprised if Saudi Arabia wanted oil at $100 until this IPO is out of the way.”

. . . Indeed, Saudi Arabia is still posting large fiscal deficits, which, if left unaddressed, present a long-term threat. Saudi foreign cash reserves are down to $488 billion, down a third from their peak in August 2014 at $737 billion, although to be sure, the pace of drawdowns has slowed. “Their breakeven is around $85 per barrel,” according to Francisco Blanch, global head of commodities research at Bank of America Merrill Lynch, citing a reason why they might continue to favor higher prices.

The risk of over-tightening the market, of course, is that it sparks an even greater response from U.S. shale. For now, a shortage of pipeline capacity in the Permian might insulate OPEC from the worst, but those bottlenecks will eventually be resolved.

Get ready for the most expensive driving season in years...

Crude oil prices are at the highest level in more than three years and expected to climb higher, pushing up gasoline prices along the way.

The U.S. daily national average for regular gasoline is now $2.81 per gallon. That's up from about $2.39 per gallon a year ago, according to Oil Price Information Service. And across the U.S., 13 percent of gas stations are charging $3 per gallon or more, AAA said last week.

"This will be the most expensive driving season since 2014," said Tom Kloza, global head of energy analysis for Oil Price Information Service.


$300 Oil 'Not Impossible'...

  • Andurand says on Twitter lack of investment risks price spike
  • Higher prices aren’t a threat to the economy, Andurand says

Pierre Andurand, one of oil’s most prominent hedge fund managers, said the current reluctance of energy companies to invest in new production meant $300 a barrel was "not impossible" within a few years.

Andurand, who’s often espoused bullish views, said in a series of tweets on Sunday that concern about the impact of electric vehicles on future demand was limiting investment in projects with long lead times.

"So paradoxically these peak demand fears might bring the largest supply shock ever," he wrote. "If oil prices do not rise fast enough, $300 oil in a few years is not impossible."

The hedge fund manager, who runs oil-focused Andurand Capital Management LLP, also went against the conventional view that triple-digit oil prices will dampen demand growth.

"So no, $100 oil will not kill the economy," he wrote. "And we need +$100 oil to encourage enough investments outside of the U.S."

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Weekly : Oil to New highs (for the year)

ZFsfoyQ.png

==== : Fye'16 : Fye'17 : +-%chg :  01/05 :  02/02 :   03/02 :  03/29  :  04/27 : 05/04 :
Gold : 1151.7 : 1309.3 : +13.7% : 1322.3 : 1337.3 : 1323.4 :  1327.3 : 1323.4 : 1314.7 :
XLE : $75.32 : $72.24 : -4.09%: $74.97 : $72.46 : $66.95: $67.41: $73.82 : $73.85 :
WTIc: $53.72 : $60.42 : +12.4% : $61.44 : $65.45 : $61.25 : $64.94 : $68.10 : $69.72 :
Au/Wt:  r-21.4 :  r-21.7 : ====== :  r21.52 : r-20.43 : r21.61 : r-20.44 : r-19.43 : r-18.86 :
DBA : $19.97 : $18.76 : -6.06%: $18.83 : $18.97 : $19.39: $18.18: $19.22 : $19.32 :
D/crb: 10.37% :  9.67% : ====== : 9.73%  :  9.61%  : 9.90% :  9.31% :   9.54% :   9.51% :
Xle/D: r-3.770 : r-3.850: +2.14%: r-3.981 : r-3.820 : r3.453 :  r-3.707 : r3.841 : r-3.822 :
DXY- : 102.38 : $92.30 : - 9.85% : $92.01 : $89.19 :: $89.91 : $89.81 : $91.53 : $92.41 :
BTC-- : $948.5 : 13,100 : x13.8X : 15,840 : $8,800 : 11,117 :  $7,401 : $9,230 : $9,593 :
==== : Fye'16 : Fye'17 : +-%chg :  01/05 :  02/02 :   03/02 :  03/29  : 04/27 : 05/04 :

BSY6D0V.png

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Gold COT Report - Rally looks set to ROLL - as Large Specs start buying again !

Uv2KtGn.png

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How the Oil Rally Took Forecasters by Surprise

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The price of crude has climbed nearly 12% this year and has reached its highest levels since 2014—a rally that has caught most big banks flat-footed.

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‘’Biggest Ever Change’’ In Oil Markets Could Send Prices Higher

Crude oil pipeline

Iran and Venezuela have dominated the oil market discourse for a while and will continue to do so in the coming months. Fears of supply shortages amid a tighter market have stoked an oil price rally that saw Brent Crude hitting $80 a barrel last week.

But an upcoming regulation that analysts have called “the biggest change in oil market history” and the “the most disruptive change in the refining industry” is lurking just around the corner, and experts say that it will drive oil prices higher as it will fundamentally shift the demand pattern for fuels.

The regulation concerns significantly limiting the sulfur content in the fuel that ships use, in a bid to curb emissions from the shipping industry.

The International Maritime Organization (IMO) has set January 1, 2020, as the starting date from which only low-sulfur fuel oil will be allowed to be used for ships. The global sulfur limit on fuel oil will be set at 0.50 percent m/m (mass/mass) in 2020, a significant cut from the 3.5 percent m/m global limit currently in place.

> https://oilprice.com/Energy/Energy-General/Biggest-Ever-Change-In-Oil-Markets-Could-Send-Prices-Higher.html?utm_medium=referral&utm_source=idealmedia&utm_campaign=oilprice.com&utm_term=68762&utm_content=1

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Oil is oversold

USO, the Oil etf, shows three waves to the downside, and is in bounce territory

USO / United States Oil Fund LP ... update : Last:

6v81TWM.gif

Best buy might come after a bounce and retest, since the "laser beam" down move could cut through support

zLd24Za.png

Strong support may not be hit until about $58

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OIL: A Better Bet for bounce now

USO - US Crude etf ... 1yr :

nbR1fbF.gif

Certainly it is a better bet now, for a bounce - maybe just a short term trade

+ three gaps.  Usually that exhausts a move

+ selling volume seems to be drying up

But we are still in the "laser-like" downchannel, so be careful.

And rally may be shortilved, and followed by a retest of the Lows or the last gap

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On 3/22/2019 at 8:02 AM, drbubb said:

Oil has run into some possible resistance

USO / US Oil etf ... update: OIH : Oilb : OIH is also at poss, resistance at $18. OILB at $30 resistance

dwaljWK.gif

Some Oil stocks like Murphy Oil are also testing resistance

MUR ... update:

6cMnnG7.gif

Energy-related shares are getting body-slammed today

OIH : $16.97 -0.78, -4.40%
USO : $12.17 -0.27, -2.17%
BPT : $26.16 -1.01, -3.72%
CNQ : $27.58 -0.87, -3.06%

Uranium-related is down too:
CCJ : $11.78 -0.33, -2.73%
URA : $12.36 -0.27, -2.14%
U.t - : $ 4.54 -0.10, -2.16%

Coal too
BTU : $29.45 -0.56, -1.87%

===> in edit: Here's what we saw after the Friday close

OIH : $16.95 -0.80, -4.50%
USO : $12.23 -0.21, -1.70%
XLE : $65.47 -1.82, -2.70%... update

DyOuS1s.gif

==

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Oil rallied back to a logical "Stall point"

USO /US Oil etf ... 5-yrs-Log : Last: $12.23 -0.21

hDVBUyk.gif

WTI Crude

uVOtYqF.png

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Friday, March 08, 2019

Norway’s Sovereign-Wealth Fund Moves Toward Divesting From Oil, Gas Stocks The Wall Street Journal Interactive Edition

The oil-rich country faces a difficult question: Is its economy too tethered to the price of crude?

Norway’s $1 trillion sovereign-wealth fund took a major step toward selling off some of its substantial holdings in oil-and-gas companies, a move to shield the oil-rich nation from the risk of permanently lower...

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TREND CHANGE UNDERWAY ??

The OIL BULL May be back in 2020 - with a weaker USD - Get Ready for it !!

BULLISH ON OIL...

(could be great timing, since we are now in Tax Selling season)

Mark Gordon / with Keith McCullough of HedgeEye

Mark Gordon: Unprecedented Opportunity in Oil Markets

/ 2 /

Mark Gordon: Why the age of oil abundance is about to end.

Erik Townsend and Patrick Ceresna welcome Mark Gordon to MacroVoices. They discuss why inventory is not what drives the price, the regime change from the age of peak oil to the age of oil abundance and possible impacts the recession will have on oil prices and more.

==

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TREND change in Oil could destroy the stock rally and so much more

120814_ENM.jpg

UPDATE

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Turn : WTI  : Ratio :  USO  : Timing - - -
High: $110?: 2.78E: 39.54 : 06 Sep 2013
High: $100?: 2.54E: 39.44 : 20 Jun 2014
High: 62.58: 2.98E: 21.00 : 05 May 2015
Low : 26.05: 3.396: $7.67 : 11 Feb 2016
High: 51.67: 4.150: 12.45 : 08 Jun 2016
Low : 39.19: 4.80E: $???  : ?? Aug 2016
High: 55.24: 4.??0: 12.??? : 31 Dec 2016
Low : 42.05: 4.861: $8.65 : 21 Jun 2017
High: 76.90: 4.735: 16.24 : 03 Oct 2018
Low : 42.36: 4.589: $9.23 : 26 Dec 2018
High: 66.60: 4.809: 13.85 : 23 Apr 2019
====

USO / US Oil etf ... 10yr: 5yr: 2yr: 1yr:

cEV9FZs.gif

===

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