Why does the oil prices keep going up?

[dan_s]

Late yesterday I talked to one of our members in New York who knows a highly respected analysts who attends all of the OPEC+ meetings. He's been attending them for over 20 years. Here are some things that I've been told were discussed at the last OPEC+ meeting:
> Oil demand is much higher than what IEA has been telling the world. China and India will take every drop of oil they can get from Russia and Iran. Russian oil production is on decline and looks like a structural problem.
> OECD petroleum inventories in the Pacific Region (Japan, South Korea, Australia, etc.) are at an all-time low.
> Total OECD Petroleum inventories are on steady decline and will soon be at an all-time low. < I've never seen OECD inventories dip to under 25 Days of Consumption and we are heading there. Based on the historical relationships that oil prices have to OECD inventories, WTI should be over $100 today and might need to go as high as $120 to get demand down to balance supply & demand.
> Saudi Arabia is the only OPEC+ country with the potential for a significant production increase and at most it is 2 million bpd. <I doubt it is that high.

MY TAKES:
> Saudi Arabia blames Team Biden for the mess in the Middle East, so they are not going to increase production to help keep U.S. gasoline prices low. They want Trump to win in November.
> The ngas/oil ratio in the Permian Basin is increasing, which means that the BOEs being produced in the U.S. might be going up, but crude oil production may have peaked.

Bloomberg:
> Ukrainian drone strikes threaten to take a significant amount of Russia’s oil refining capacity offline as the attacks extend further into the country, according to JPMorgan Chase & Co.
> About 670,000 barrels a day of capacity is currently offline following the latest attacks by drones that now have a substantially longer range, JPMorgan analysts including Natasha Kaneva wrote in a note dated April 3. The losses could worsen as Ukraine builds a full-fledged drone industry.
> Since the start of 2024, Ukraine has increasingly targeted refineries as it seeks to boost the economic cost for the Kremlin. So far, Russia has managed to repair the damage at most of the facilities relatively quickly.
> Ukrainian drones have hit targets as far as 1,200 kilometers (746 miles) away, including the Taneco refinery this week. That represents a radius that includes 19 refineries with a combined capacity of 3.8 million barrels a day, or more than half of Russia’s capacity, according to JPMorgan. If the range increases to 1,500 kilometers, another 600,000 barrels a day would be at risk, the analysts wrote.

[aja57]

https://twitter.com/SheDrills/status/1775550411291701608
From 2011-14 oil range traded btwn $90-110/bbl. In inflation adjusted dollars...oil should be range trading btwn $124-152/bbl. $80/bbl in 2011 is $120/bbl today. If you don't see oil as cheap here you have recency bias caused by shale oversupply, a global price war, then covid crash from 2015-21. #EFT #OOTT $XLE $XOP $OIH $XES

GKQFdodWIAAG5fv.jpg (59.04 KiB) Viewed 132 times

[Fraser921]

New news, after market on Friday...I expect crude to continue to rise

https://twitter.com/chigrl/status/1776555465872232612

On the night of April 6, 2024, in the area of the village of Azov (Rostov region) as a result of the explosion of a pipeline that pumped petroleum products from a local oil depot to tankers in the area of the Azov Sea Port, the loading of tankers with petroleum products was suspended for an indefinite period,” the report says.

[aja57]

Saudis say FU to FJB as Blinken travels to Saudi Arabia.

https://oilprice.com/Latest-Energy-News/World-News/Saudi-Arabia-Hikes-Oil-Prices-in-Increasingly-Tight-Market.html