The oil market starts the week with gains. The next big move may depend on the US government

The United States is currently adding about 820,000 barrels of oil per day to the 100 million bpd global oil market via the release of a strategic setback. The pace of sales was below the mandated level of 1 mbpd, likely due to technical issues.

The sale of barrels in storage should continue until October, but the question remains open as to what will happen beyond that. The SPR fell to 480 million barrels, the lowest since 1986.

Of course, that’s still 480 million barrels, which is enough to add 1 mbpd for another 480 days.

The idea however is that the lower limit of the SPR outside of a true emergency is 300 mbpd to ensure proper operation. Beyond that is the policy of emptying US stocks at a time when there is no real shortage.

Late Friday after the market closed, we got a glimpse of what was to come.

The strategic oil release “was really a stopgap measure,” said Amos Hochstein, Biden’s special presidential coordinator for international energy affairs. “We cannot be an oil supplier. It is a reserve and therefore we must keep it.

Hochstein said US companies will fill the void by increasing production from 800,000 barrels per day to 1 mbpd by the end of the year.

This is optimistic, as inventories of drilled but incomplete wells continue to decline. Last week we heard from oil and gas service companies telling us that they are full this year and finding employees and tips is extremely difficult. Finally, we heard this from the WSJ last week regarding the Saudi supply.

Saudi Arabia is now also near the limit of what it can pump comfortably and for an extended period, according to people familiar with Saudi oil operations. The kingdom said its production capacity stands at around 12 million barrels per day. It is currently producing around 10.5 million barrels per day, according to people familiar with the matter. This means it could potentially increase production by at least an additional 1.5 million barrels per day. But people familiar with the operations say Riyadh would struggle to produce 11 million barrels a day for more than a few months at a stretch and 12 million barrels a day for more than a few weeks.

Today we also heard from Argus who said that OPEC pumped 2.84 million barrels per day under its collective quota in June.

WTI crude oil

Crude oil

Crude oil is the most popular tradable instrument in the energy sector, providing exposure to global market conditions, geopolitical risks and the economy. The instrument is strategically used and located in the global economy. Crude oil has proven to be a unique option for traders given the volatility and effectiveness of swing trading and longer term strategies. Despite its popularity, crude oil is a very complex investment instrument, given the litany of oil price swings, risks and policy impact stemming from OPEC. Short for the Organization of the Petroleum Exporting Countries, OPEC functions as an intergovernmental organization of 13 countries, helping to define and dictate the global oil market. through other instruments exhibited there. This includes energy stocks, USD/CAD and other investment options. Crude oil itself is traded on a duality of markets, including West Texas Intermediate Crude (WTI) and Brent. Brent has been the most widely used index in recent years, while WTI is more heavily traded on futures contracts at the time of writing. Apart from geopolitical events or OPEC decisions, crude oil can move in different ways. The most basic is simple supply and demand, which is affected by global production. Rising industrial production, economic prosperity and other factors all play a role in crude prices. By extension, recessions, lockdowns or other stifling factors can also influence crude prices. For example, excess supply or subdued demand due to the aforementioned factors would cause crude prices to decline. This is due to traders selling crude oil futures or other instruments. If demand increases or production plateaus, traders will bid higher and higher on the rough, pushing prices up.

Crude oil is the most popular tradable instrument in the energy sector, providing exposure to global market conditions, geopolitical risks and the economy. The instrument is strategically used and located in the global economy. Crude oil has proven to be a unique option for traders given the volatility and effectiveness of swing trading and longer term strategies. Despite its popularity, crude oil is a very complex investment instrument, given the litany of oil price swings, risks and policy impact stemming from OPEC. Short for the Organization of the Petroleum Exporting Countries, OPEC functions as an intergovernmental organization of 13 countries, helping to define and dictate the global oil market. through other instruments exhibited there. This includes energy stocks, USD/CAD and other investment options. Crude oil itself is traded on a duality of markets, including West Texas Intermediate Crude (WTI) and Brent. Brent has been the most widely used index in recent years, while WTI is more heavily traded on futures contracts at the time of writing. Apart from geopolitical events or OPEC decisions, crude oil can move in different ways. The most basic is simple supply and demand, which is affected by global production. Rising industrial production, economic prosperity and other factors all play a role in crude prices. By extension, recessions, lockdowns or other stifling factors can also influence crude prices. For example, excess supply or subdued demand due to the aforementioned factors would cause crude prices to decline. This is due to traders selling crude oil futures or other instruments. If demand increases or production plateaus, traders will bid higher and higher on the rough, pushing prices up.
Read this term is still precariously close to recent lows, but there is a $9 gap against brent and that should encourage exports and a narrowing of the gap.

Leave a Comment

Your email address will not be published.