Oil Traders waiting to see what OPEC+ will do - Oct 1

[dan_s]

The cartel will tell us on Monday, October 4. MY TAKE is that it really doesn't matter in the long run. If they do double up and increase output by 800,000 bpd instead of the 400,000 bpd per month plan, it will just accelerate when they run out of spare capacity. 2/3rds of the OPEC member countries are already tapped out and cannot raise production. We are now on a path to a world with no spare capacity by mid-2022.

LONDON (Reuters) -Brent Oil fell to around $78 a barrel on Friday on the prospect that OPEC+ producers might step up a planned increase in output to ease supply concerns, although crude remained in sight of a three-year high reached this week.

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, meet on Monday. Four OPEC+ sources said on Thursday the group was looking at going beyond an existing deal to add 400,000 barrels per day to supply each month.

Beyond October, "a faster ramp-up in OPEC+ production cannot be excluded," said Stephen Brennock of oil broker PVM. "The prospect of $80 oil does not sit well with the producer group."

Brent crude fell 41 cents, or 0.5%, to $77.90 at 1220 GMT, heading for a weekly decline after three weeks of gains. U.S. West Texas Intermediate (WTI) slipped 69 cents to $74.34, still set for a sixth week of rises.

Crude also came under pressure on Friday from a strong U.S. dollar and rise in U.S. crude inventories reported this week. [EIA/S] [USD/]

A strong dollar makes oil more expensive for holders of other currencies and tends to reflect lower investor risk appetite.

Even so, Brent has risen 50% this year and reached a three-year high of $80.75 on Tuesday. OPEC+ is facing pressure from consumers such as the United States and India to produce more to help reduce prices.

Jeffrey Halley, analyst at brokerage OANDA, said there was potential for Monday's OPEC+ meeting to disappoint in terms of adding more supply, citing the inability of some members to raise output and the appeal of high prices to boost revenues.

"Whichever way you cut it; shorting oil is only for the brave with very deep pockets," he said.

Oil is also finding support as a surge in natural gas prices globally prompts power producers to move away from gas. Generators in Pakistan, Bangladesh and the Middle East have started switching fuels.

[KGardiner]

Dan, which OPEC members are At Capacity today?
Where would I look to find such information?

Thanks
Kevin

[dan_s]

Only Saudi Arabia, UAE and Kuwait have significant spare capacity.

Go to the OPEC website: https://www.opec.org/opec_web/en/index.htm

Read: https://www.wsj.com/articles/opec-boss- ... 1633094443

[dan_s]

One of our members sent me a chart from Bloomberg. It shows that OPEC's actual production in September was 27,490,000 bpd, which compares to 27,130,000 bpd in August, so up 360,000 bpd.

The same chart shows the cartel's total production capacity (per OPEC) of 34,535,000 bpd with 4,430,000 of that sitting in Iran and Venezuela.

Many people, including me, believe that OPEC's claimed spare capacity includes a lot of "probable" reserves that will take several years and lots of money to develop and bring online. Including Iran, my take is that OPEC has 3.0 to 3.5 million bpd of production that can be brought back online by the end of 2022. If so, their plan to bring 400,000 bpd per month will run out within nine months.

Pre-pandemic and pre-sanctions against Iran, OPEC's max production was ~32,000,000 bpd.

There are some good charts in the most recent Raymond James oil price forecast that I can email to you.
Send me a note: dmsteffens@comcast.net and I will send it to you.