The oil price is MUCH HIGHER today than I expected it to be at this point in the rebound phase back on January 1.
A close above $55/bbl for WTI would be extremely bullish.
Technical analysis:
Crude Oil's price fell with the stock market in October. It continued to move down to a bottom in December on Christmas Eve and then bounced. Crude Oil has been acting just like a stock. That correlation may have slipped the past couple of weeks though with Crude Oil stalling at resistance while stocks continued higher.
A closer look at the chart for Crude Oil shows real promise for more upside though. The small pause and bounce in November on the way down, and then the recent drift back and reversal, have created a possible Inverse Head and Shoulders pattern in the price action.
The neckline of the pattern at about 54.50, sits just below a 38.2% retracement of the drop from October. A break above the neckline gives a target to about $66. This would bring Crude Oil back over the 200 day SMA and the 61.8% retracement. Momentum is on the edge of the bullish zone with the RSI running flat just under 60, while the MACD is positive.
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The reason I believe a close above $55 is bullish is because hedge fund trading programs are based on technical stuff like this. There is very little technical resistance between $55 and $60. Therefore, I believe funds will be hesitant to short oil until it tops $60. Plus, OPEC+ is cutting production faster than most "experts" thought they would. Russia will soon join the production cut party. Venezuela and Libya are a mess with little hope of improvement.
Oil Price - Feb 1
Oil Price - Feb 1
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Feb 1
I believe the situation in Venezuela may have a much larger impact on oil prices than most people realize.
Read: https://oilprice.com/Energy/Crude-Oil/T ... ating.html
Some "experts" believe a new government in Venezuela will be able to rapidly increase the country's oil production. I believe that is totally "wishful thinking". Venezuela is a "HELL HOLE" and will remain a mess for several years no matter who is running the country.
Read: https://oilprice.com/Energy/Crude-Oil/T ... ating.html
Some "experts" believe a new government in Venezuela will be able to rapidly increase the country's oil production. I believe that is totally "wishful thinking". Venezuela is a "HELL HOLE" and will remain a mess for several years no matter who is running the country.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Feb 1
From Bloomberg
Venezuela has relied on the U.S. for a bespoke refined product it desperately needs to keep its oil flowing. Now it needs to find someone else — fast.
The product — known as heavy naphtha — is a custom-made product that comes only from certain refineries. Most of the time, it’s fed into reformer units to make more-valuable gasoline and hydrogen. Another use is to dilute sludgy Venezuelan oil so it can move in pipelines to the coast for export.
Venezuela imported about 90,000 barrels a day from the U.S. last year. Once its stored supplies run out, state-run Petroleos de Venezuela SA may have a hard time finding more, after the Trump administration in its sanctions targeted exports of diluent to PDVSA, most of which is heavy naphtha.
Reliance Industries Ltd. ordered a tanker that had carried naphtha to Venezuela’s Jose Terminal to stop discharging the cargo, people familiar with the matter said. Another tanker carrying naphtha to Venezuela, the DS Promoter, has stopped off Aruba.
Unless it can bring in more supply, the South American nation may be forced to shut-in oil fields, hurting its ability to bring in cash and pay back loans. That would deal a further blow to the country’s oil production, which fell to a 69-year low of 1.339 million barrels a day last year and is already expected to drop below the one-million barrel mark in 2019.
Last year, all of the cargoes that Venezuela imported came from the U.S. While all refiners produce naphtha, not many make the quality — between 50 degrees and 63 degrees API — that is dense enough to bind with the nation’s extra-heavy oil, the people said. This bespoke naphtha is produced by a few U.S. refineries and condensate splitters, which partially refine an extra-light oil.
In the past, Trafigura Group Pte Ltd.’s condensate splitter in Corpus Christi, Texas, and Royal Dutch Shell Plc’s Deer Park, Texas refinery have supplied PDVSA, the people said. Finding suppliers in Europe or in naphtha-deficit Asia may prove hard, given the setup of the refineries in those regions.
PDVSA has been calling around to traders to buy naphtha and gasoline, according to a person familiar with the matter.
Citgo Supplies
The naphtha was typically bought by PDVSA’s U.S. refining unit Citgo Petroleum Corp., which invited a few suppliers in private deals. The last time Citgo sought supplies, it was looking for 1.5 million barrels of heavy naphtha for delivery in February. After the sanctions, PDVSA may go to the open market directly via tenders, the people said.
The pressure to find suppliers only increased as President Trump’s National security adviser John Bolton told oil traders to stop doing business with Venezuelan president Nicolas Maduro in a tweet Wednesday. And if the European Union follows the U.S. lead, the pressure could intensify. Some traders have temporarily stopped dealings with PDVSA, awaiting the U.S. Treasury to release details and clarification about the implementation of the sanctions.
Now that America is prohibited from supplying naphtha to PDVSA from April 28, Europe is the next-best option, but at a higher cost. Equinor ASA’s Mongstad refinery in Norway has supplied to PDVSA in the past, according to the people.
Suppliers in Asia would be another option, although distance, freight and the problem of buying enough to fill larger tankers would be an issue. Asia is also a net importer of both light and heavy naphtha, although a price window has made exports to the Atlantic possible in the past, the people said.
Venezuela has relied on the U.S. for a bespoke refined product it desperately needs to keep its oil flowing. Now it needs to find someone else — fast.
The product — known as heavy naphtha — is a custom-made product that comes only from certain refineries. Most of the time, it’s fed into reformer units to make more-valuable gasoline and hydrogen. Another use is to dilute sludgy Venezuelan oil so it can move in pipelines to the coast for export.
Venezuela imported about 90,000 barrels a day from the U.S. last year. Once its stored supplies run out, state-run Petroleos de Venezuela SA may have a hard time finding more, after the Trump administration in its sanctions targeted exports of diluent to PDVSA, most of which is heavy naphtha.
Reliance Industries Ltd. ordered a tanker that had carried naphtha to Venezuela’s Jose Terminal to stop discharging the cargo, people familiar with the matter said. Another tanker carrying naphtha to Venezuela, the DS Promoter, has stopped off Aruba.
Unless it can bring in more supply, the South American nation may be forced to shut-in oil fields, hurting its ability to bring in cash and pay back loans. That would deal a further blow to the country’s oil production, which fell to a 69-year low of 1.339 million barrels a day last year and is already expected to drop below the one-million barrel mark in 2019.
Last year, all of the cargoes that Venezuela imported came from the U.S. While all refiners produce naphtha, not many make the quality — between 50 degrees and 63 degrees API — that is dense enough to bind with the nation’s extra-heavy oil, the people said. This bespoke naphtha is produced by a few U.S. refineries and condensate splitters, which partially refine an extra-light oil.
In the past, Trafigura Group Pte Ltd.’s condensate splitter in Corpus Christi, Texas, and Royal Dutch Shell Plc’s Deer Park, Texas refinery have supplied PDVSA, the people said. Finding suppliers in Europe or in naphtha-deficit Asia may prove hard, given the setup of the refineries in those regions.
PDVSA has been calling around to traders to buy naphtha and gasoline, according to a person familiar with the matter.
Citgo Supplies
The naphtha was typically bought by PDVSA’s U.S. refining unit Citgo Petroleum Corp., which invited a few suppliers in private deals. The last time Citgo sought supplies, it was looking for 1.5 million barrels of heavy naphtha for delivery in February. After the sanctions, PDVSA may go to the open market directly via tenders, the people said.
The pressure to find suppliers only increased as President Trump’s National security adviser John Bolton told oil traders to stop doing business with Venezuelan president Nicolas Maduro in a tweet Wednesday. And if the European Union follows the U.S. lead, the pressure could intensify. Some traders have temporarily stopped dealings with PDVSA, awaiting the U.S. Treasury to release details and clarification about the implementation of the sanctions.
Now that America is prohibited from supplying naphtha to PDVSA from April 28, Europe is the next-best option, but at a higher cost. Equinor ASA’s Mongstad refinery in Norway has supplied to PDVSA in the past, according to the people.
Suppliers in Asia would be another option, although distance, freight and the problem of buying enough to fill larger tankers would be an issue. Asia is also a net importer of both light and heavy naphtha, although a price window has made exports to the Atlantic possible in the past, the people said.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
-
jmwSeattle
- Posts: 16
- Joined: Wed Jan 16, 2019 10:34 pm
Re: Oil Price - Feb 1
As stated elsewhere, “Incompetence has led to serious inefficiencies and accidents.”
I think Venezuela expropriated oil operations from US oil companies and they don’t have the expertise to produce the oil efficiently and without degrading the fields.
I read somewhere that ExxonMobile has thousand of Ph.D scientists and engineers to accomplish their results.
It’s actually a high tech business and Venezuela just doesn’t have the “right stuff.”
Since they’re leftists anyway they should be advocating the closing down of their oil fields to prevent global warming.
I think Venezuela expropriated oil operations from US oil companies and they don’t have the expertise to produce the oil efficiently and without degrading the fields.
I read somewhere that ExxonMobile has thousand of Ph.D scientists and engineers to accomplish their results.
It’s actually a high tech business and Venezuela just doesn’t have the “right stuff.”
Since they’re leftists anyway they should be advocating the closing down of their oil fields to prevent global warming.