Here is why oil price is spiking this morning - Sept 27

[dan_s]

Short Covering Rally in WTI NYMEX futures contracts this morning pushes WTI up $2.00/bbl.

The Senate Leads Away from Shutdown. Will the House Follow?
September 27, 2023

SUMMARY

Bipartisan Senate leaders agreed and have votes to pass a Continuing Resolution introduced last night. It would fund government through November 17, and extend farm, FAA, and flood insurance programs set to expire Saturday night. Expected parliamentary roadblocks likely push final votes to Thursday or more likely Friday. Speaker McCarthy wants President Biden to embrace a border funding scheme that would politically expose a few dozen in his Conference – one the Senate can’t pass and Biden wouldn’t sign.

This impasse is a search for leverage in the House, while the Senate seeks to avert shutdown. Shuttering the government for a few days seems increasingly likely. Political costs resulting from that legislative default would favor enactment next week of something like the Senate plan. We reiterate our view that this lingering disagreement poses no market or economic risk. A shutdown lasting longer than two weeks would cause us to revisit this call.

OUTLOOK

Process. The House of Representatives hasn’t passed a budget resolution or an appropriations bill to highlight legislative differences with Democrats. An inability to pass even FY24 defense appropriations, or gain majority support for an FY24 spending outline within the House GOP Conference leaves all House Republicans vulnerable to charges of mismanagement.

Context. The world is healing from most pandemic shocks at varying rates. Arguably, the US is best situated during this transition relative to all other large, advanced economies. Nonetheless, Americans tell pollsters household economics are their biggest concern. Lacking a marketable, convincing rationale for voluntarily closing government, proponents invite electoral risk to their party.

Strategy. The lack of a plan resulted only in House Republicans publicly speaking of shutdown as negotiating leverage. Juxtaposed against a detailed bipartisan Senate plan that leverage is fanciful absent agreement on a way forward. Rarely do people negotiate against themselves, but that’s what shutdown supporters hope will materialize. It won’t.

Leadership. To date, the only House Republican, McCarthy, able to garner sufficient votes to be Speaker opposes a shutdown. His close confident, House Financial Services Committee Chairman Patrick McHenry (NC) two weeks ago indicated Congress would fulfill the debt limit deal FY24 budget outline – while keeping government open. None of the 15–20 favoring shutdown have votes to elect a new Speaker, they and everyone knows this. That knowledge further weakens if not eviscerates any leverage shutdown advocates hope to create.

The risk to our call of no shutdown or one of limited duration is a willingness by Republicans in 40–45 competitive districts to allow a result for which there is no explanation. The Speaker’s unrequited plea to the President to avoid a shutdown by accepting border policies for which proponents don’t have votes to pass acknowledges McCarthy’s internal challenges – not a way forward for the Senate or the White House.

Differences over the facts and politics of southern border security and law enforcement are decades old. Neither party has ever ‘solved’ the problem that requires several nations’ coordinated policy contributions. Immigration reform might serve as a credible platform for addressing myriad US migration problems but that is not on offer. Whether and what legislation the House can pass this week could spur a shutdown or CR of a few days to discover a middle ground or let Americans react to the inexplicable standoff.

[aja57]

Come hell or high-water, the politicians will get their monopoly money to disperse to their lobbyist gravy train. Oh they are working so hard for the people..

[dan_s]

Oil could be headed as high as $150 unless the U.S. boosts its output, says major exploration firm. Markets Insider.

Oil prices could be headed as high as $150 a barrel unless the US boosts its exploration efforts, a top shale executive warned. Once crude oil output in the Permian Basin peaks with no new sources coming online, then a supply squeeze could see "$120 to $150" oil, Continental Resources CEO Doug Lawler told Bloomberg TV on Monday.

$150 for WTI would not be good for the economy. Inflation would go through the roof.

It will be best if WTI stabilizes in the $90 to $100 range, but the "Paper Traders" tend to over-shoot the mark. Raymond James is forecasting $120 by year end.

[Fraser921]

Crude is running hard, UP 3.24! AT 11:30 AM