"Noise" keeping a lid on oil prices - Sept 29

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

"Noise" keeping a lid on oil prices - Sept 29

Post by dan_s »

IMO the only fundamental reason for oil is under $100/bbl is the sharp increase in the US dollar.

"Next year, oil prices could rebound to above $100 per barrel if China lifts Covid-related mobility restrictions and the Fed slows or pauses rate hikes to try to boost growth, the economist told Reuters."

Read this: https://oilprice.com/Energy/Energy-Gene ... -Year.html

I do expect OPEC+ to cut production quotas next week because they are not even close to producing up to the current quotas.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: "Noise" keeping a lid on oil prices - Sept 29

Post by dan_s »

OPEC+ Is Considering A Substantial Oil Production Cut
By Tsvetana Paraskova - Sep 29, 2022, 6:30 AM CDT

Several major producers of the OPEC+ alliance have started talks about a potential oil production cut ahead of the regular monthly OPEC+ meeting on October 5, OPEC and OPEC+ sources told Reuters on Thursday.

OPEC+ meets next Wednesday to discuss the market and fundamentals situation as oil prices have fallen below $90 per barrel, a level last seen just before the Russian invasion of Ukraine.

It is "likely" that the group will agree on a cut, a source at OPEC told Reuters.

At the previous meeting, OPEC+ reversed the 100,000-barrels-per-day increase for September and returned the October quota to the levels from August.

While the slight tweak in the group's collective target is negligible for oil market balances, OPEC+ signaled readiness to intervene in the market at any time. The meeting in early September decided to "Request the Chairman to consider calling for an OPEC and non-OPEC Ministerial Meeting anytime to address market developments, if necessary."

Earlier this week, Reuters sources familiar with Russian thinking said that Russia was likely to propose at the next OPEC+ meeting that the group cut 1 million barrels per day (bpd) from the group's collective output.

In reality, the cut would be much smaller, considering that many OPEC+ members, including Russia, are pumping well below their respective targets.

One of the latest estimates put the gap between the quota and actual output widening to a massive 3.58 million bpd in August.

At any rate, a large cut from OPEC+ next week would support oil prices, and there is growing consensus among analysts that a production cut is coming.

"We certainly see a significant chance that the producer group will opt for a substantial cut to try to signal that there is indeed an effective circuit breaker in the market," Helima Croft, chief commodities strategist at RBC Capital Markets, said on Thursday, as carried by Bloomberg. The cut could be as much as 1 million bpd, according to Croft.

By Tsvetana Paraskova for Oilprice.com
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: "Noise" keeping a lid on oil prices - Sept 29

Post by dan_s »

Oil prices could be set for another sharp rise. Oilprice.com
"It's been a rough couple of weeks in the energy market. As potential energy company investors, we are not sorry to see the back of last week in particular. That's the understatement of the year. Pretty near every negative sentiment-Recession, Fed tightening, Dollar strength, China demand, Inventory builds, or what amounts to the entire oil price Closet of Anxieties, came to pass last week. Oil-WTI took a tumble below $80 for the first time since Jan 11th of this year, closing Friday below its 200-day moving average of $89.00. This move has WTI nearing an important psychological level in the lower $ 70s, past which producers will sharply curtail capex to raise prices."

Read why he thinks oil price should push higher in late Q4:
https://oilprice.com/Energy/Oil-Prices/ ... -Rise.html

In this article, I will argue that the selling is overdone and neglects one basic truth about the oil market. It is under-supplied, and it is only the SPR releases that have been masking that fact. We are on the verge of an energy calamity that will begin to manifest itself in the coming months. As the economy of the world begins to accelerate in 2023, the era of energy insecurity will begin. The important takeaway is that there is nothing that can be done to prevent this “train from barreling into the station.” A recent NY Times article put it succinctly-

“That’s because there’s just no extra supply out there today at all. There’s a very little extra supply that the Saudis and the Emiratis can put on the market. And that’s about it. We’ve used the strategic petroleum reserve, and that’s coming to an end in the next several months. There’s just no extra cushion in the oil market right now.”
Dan Steffens
Energy Prospectus Group
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