Oil Price finds a support level FINALLY - March 7

[dan_s]

Trading Economics
WTI crude rebounded to $67.3 per barrel Friday morning, attempting to recover from recent declines, after Russia's Deputy Prime Minister Novak indicated that OPEC+ could reconsider its planned output increase after April if market conditions remain imbalanced. Despite the uptick, WTI remains on track for a 3.3% weekly decline, pressured by uncertainty over U.S. tariff policy and expectations of increased output from major oil producers.
> While President Trump eased some tariffs on Mexico and Canada until April 2, Canada’s retaliatory tariffs remain in place, and China’s countermeasures are set to take effect next week.
> Adding to bearish sentiment, OPEC+ plans to increase output in April, coinciding with the potential restart of the Kirkuk-Ceyhan pipeline and rising production at Kazakhstan’s Tengiz field, heightening oversupply concerns.
> Moreover, there is the prospect of US sanctions on Russia being lifted, following President Putin’s indication of interest in a peace deal for Ukraine.

HFI Research:
WTI went from $75.83 to $66.36/bbl. All the while, 1) US crude oil production is disappointing (~13.1 million b/d real-time production), 2) OPEC+ is increasing production one quarter in advance of our forecast, 3) global oil inventories are down YTD, and 4) China is finally stepping up with meaningful fiscal stimulus.

So why are oil prices down?

Speculators got long too early and as they dump into the market today, positioning is getting stretched once again to the downside.

This yo-yo back and forth in positioning has created some chaotic price movements as of late. Take for instance that WTI is about to close down for 8-weeks straight this week.

The last time this occurred was in 2015 (10-weeks down). Even during 2018, 2020, and 2023, WTI closed down at most 7 weeks in a row. While the magnitude was much greater in those 3 instances, it goes to show why energy investors are feeling the additional pain this week.

To make matters worse, the double whammy of tariffs + OPEC production increase came on Monday leading energy investors to sell out in unison on Tuesday. At one point, MEG Energy, one of the highest quality oilsand producers, traded below C$20 per share.

As I watched the Canadian energy sector get massacred, I knew I had to start deploying the capital I had on the sidelines (thanks to the Gear transaction).
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My Takes:
> This world still runs on oil.
> U.S. and OECD petroleum inventories are lower than normal.
> OPEC / Saudi Arabia will do what is in their best interest, which is higher oil prices.

[dan_s]

US natural gas futures fell below $4.3/MMBtu from a 25-month high of $4.5 in the previous session, following EIA data showing a smaller-than-expected storage draw. US utilities withdrew 80 billion cubic feet (bcf) of gas for the week ending February 28, below market forecasts of 96 bcf, bringing total inventories to 1,760 bcf. Despite record production of 104.7 bcfd in February, storage levels remain 24.9% lower than a year ago and 11.3% below the five-year average. LNG exports also surged to a record 15.6 bcfd last month, supported by new capacity at Venture Global’s Plaquemines plant. However, forecasts for milder weather through March 18 are expected to curb heating demand.

[dan_s]

"If Trudeau had a brain, which he doesn't, he would convince Alberta, which he can't, to mandate a production cut similar to 2018 when WCS-WTI spreads blew out. A 500k b/d decrease would smack US commercial crude storage by ~3.5 million bbls a week." - HFI Research 3-7-2025

[ChuckGeb]

I think it would be much smarter for Trudeau to reach out to Trump about getting a pipeline built.

[aja57]

This tweet suggests oil is going lower..

https://x.com/dogeai_gov/status/1898099213268930638

[aja57]

It's shareholders v Trump
https://boereport.com/2025/03/07/top-oil-executives-reckon-with-downturn-even-as-trump-cheers-them-on/