Why are oil prices likely to go over $100/bbl?
Posted: Tue Feb 01, 2022 2:33 pm
OilPrice.com with my comments in blue:
> With ICE Brent spiking above $90 per barrel earlier this week, the focus of the oil industry is increasingly on stock changes across the globe as inventories in OECD nations plunged to a 7-year low. < As I have been telling EPG members for over a year, OECD petroleum inventories are the primary driver of oil price and they CANNOT keep falling because a steady supply of oil-based products is critical to the global economy. This world runs on oil and will continue to do so for decades. OECD inventories are now at 26 Days of Consumption and the decline MUST BE STOPPED SOON.
> Commercial crude stocks in the US have seen some optimism lately with another stock build expected this week, but combined crude and product stocks are still some 100 million barrels below the 5-year range. < Distillates (diesel and home heating oil) inventories are at DANGEROUS levels in the U.S. We need more heavy oil to make these vital products. We cannot solve our supply chain problems without lots of diesel.
> The historically below-average levels of crude inventories are in a large part a consequence of OPEC undershooting its supply commitments. According to Reuters data, OPEC+ missed its oil production target by an average rate of 800,000 b/d last year as most countries have hit their spare capacity limits. < The "BIG PARADIGM SHIFT" is that OPEC+ is already out of spare capacity.
> With ICE Brent spiking above $90 per barrel earlier this week, the focus of the oil industry is increasingly on stock changes across the globe as inventories in OECD nations plunged to a 7-year low. < As I have been telling EPG members for over a year, OECD petroleum inventories are the primary driver of oil price and they CANNOT keep falling because a steady supply of oil-based products is critical to the global economy. This world runs on oil and will continue to do so for decades. OECD inventories are now at 26 Days of Consumption and the decline MUST BE STOPPED SOON.
> Commercial crude stocks in the US have seen some optimism lately with another stock build expected this week, but combined crude and product stocks are still some 100 million barrels below the 5-year range. < Distillates (diesel and home heating oil) inventories are at DANGEROUS levels in the U.S. We need more heavy oil to make these vital products. We cannot solve our supply chain problems without lots of diesel.
> The historically below-average levels of crude inventories are in a large part a consequence of OPEC undershooting its supply commitments. According to Reuters data, OPEC+ missed its oil production target by an average rate of 800,000 b/d last year as most countries have hit their spare capacity limits. < The "BIG PARADIGM SHIFT" is that OPEC+ is already out of spare capacity.