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Falling oil inventories is what matters, not geopolitics: Eric Nuttall

Falling oil inventories is what matters, not geopolitics: Eric Nuttall

Video: https://www.bnnbloomberg.ca/video/falling-oil-inventories-is-what-matters-not-geopolitics-eric-nuttall~2382581?fbclid=IwAR35n9dgxwTWlZkX2bEYyy72SOGJR0eQM3MkFzRENmj9S8oDz0xkI9XfP8o

Oil prices are retreating as tensions between Russia and Ukraine ease and investors grow more concerned about an Iran nuclear deal, so what does it all mean for the oil market long-term? Eric Nuttall, partner and senior portfolio manager of Ninepoint Partners, joins BNN Bloomberg for his outlook.

“I’ve Never Seen A Market Like This”: Goldman Sees Shortages Of Everything, “You Name It, We’re Out Of It”

“I’ve Never Seen A Market Like This”: Goldman Sees Shortages Of Everything, “You Name It, We’re Out Of It”

It’s probably not the endorsement Biden’s flailing administration wanted.

In a time when social networks have been swamped with photos of empty shelves from across the nation, Goldman’s head commodity strategist and one of the closest-followed analysts on Wall Street, said he’s never seen commodity markets pricing in the shortages they are right now.

“I’ve been doing this 30 years and I’ve never seen markets like this,” Currie told Bloomberg TV in an interview on Monday. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”

In a reversal of the event from April 2020, when WTI oil briefly hit a negative $40 per barrell as speculators paid others to take deliverable oil contracts off their hands as they had no storage for it, futures curves in several key markets are trading in super-backwardation – a structure that indicates traders are paying bumper premiums for immediate supply. The downward sloping shape in prices is generally taken to mean commodities are severely undersupplied.

The shortage of, well, everything has translated into record price of virtually all commodities: the Bloomberg Commodity Spot Index, which tracks 23 energy, metals and crop futures, has touched a record this year. That has been driven in part by surging oil prices, which have hit their highest level since 2014 and earlier today Brent rose as high as $94, assuring even more pain at the pump.

Separately, assuring even more pain for logistics, Bloomberg notes that diesel futures are in their strongest backwardation since 2008, excluding expiry days.

Additionally, all six of the main industrial metals traded on the London Metal Exchange moved into backwardation late last year, in a rare synchronized bout of tightness last seen in 2007.

…click on the above link to read the rest of the article…

Oil Spikes On White House Report Russia Planning False Flag Against Ukraine Using ‘Graphic Video’, Crisis Actors

Oil Spikes On White House Report Russia Planning False Flag Against Ukraine Using ‘Graphic Video’, Crisis Actors

The Washington Post is reporting Thursday bizarre and sensational claims by US intelligence saying that Russia planned to stage a false flag to justify a massive invasion of Ukraine. Specifically Russian intelligence is being accused of producing a fake video showing a Ukrainian Bayraktar TB-2 drone attacking pro-Russian separatists in Ukraine’s eastern regions, which was to “fabricate a pretext for an invasion.”

Oil surged as the bombshell claims against Moscow quickly grabbed world headlines, emerging as the NY Times and CNN top story by early afternoon.

Here are the details an unnamed senior Biden admin official told CNN:

A senior administration official told CNN that the US has intelligence suggesting that the Russian government, with the help of Russia’s intelligence services, has been planning to produce a propaganda video depicting graphic scenes of a “staged false explosion with corpses, actors depicting mourners, and images of destroyed locations and military equipment,” the official said. The US believes Russia has already recruited actors to be involved in the fake attack.

“This video, if released, could provide Putin the spark he needs to initiate and justify military operations against Ukraine,” the official added. It follows claims last month that Russia could be plotting false flag attacks against its own proxies in Donbas.

Interestingly, The Washington Post – which was the first to report the story – alongside other like CNN has introduced some level of doubt within their own reporting

…click on the above link to read the rest of the article…

Oil Rally Fueled By OPEC Production Shortfall

Oil Rally Fueled By OPEC Production Shortfall

  • In December, OPEC+ added 253,000 barrels daily to its combined production falling well short of its 400,000-bpd target
  • OPEC’s underproduction fuels speculation about the cartel’s ability to ramp up production
  • Morgan Stanley: global spare oil production capacity will shrink from 6.5 million bpd at the moment to just 2 million barrels daily by the middle of the year

That OPEC’s spare oil production capacity was a problem that was only going to get worse with time became clear last year when the first reports began to emerge that the cartel and its partners led by Russia are not adding as much oil to their monthly output as agreed. Now, the gap between commitment and output has deepened, adding fuel to an already strong price rally.

In December, OPEC+ added 253,000 barrels daily to its combined production falling well short of its 400,000-bpd target for yet another month in a growing row. Naturally, this fueled concern about the security of global supply amid forecasts from the International Energy Agency that oil demand is going to exceed pre-pandemic levels later this year.

This latest forecast could be confusing to many who follow the agency’s output. In December, the IEA said that oil demand growth was going to slow down this year. It also forecasted a possible oversupply on the oil market for the current quarter, citing the effect of the Omicron variant on fuel consumption and rising non-OPEC production.

To be fair, the agency noted the oversupply would materialize if several things happen, among them, Saudi Arabia and Russia pumping at record rates as “remaining OPEC+ cuts are fully unwound.” Yet it appears to have greatly underestimated the resilience and strength of demand. No wonder a lot of other forecasters are talking about oil reaching and topping $100 per barrel.

…click on the above link to read the rest of the article…

Morgan Stanley Jumps On The $100 Oil Bandwagon

Morgan Stanley Jumps On The $100 Oil Bandwagon

Morgan Stanley expects oil prices to hit $100 per barrel in the second half of the year, becoming the latest major Wall Street bank to expect triple-digit oil prices by the end of 2022.

The oil market is headed to a “triple deficit” of low inventories, low spare production capacity, and low investment, Morgan Stanley said in a note carried by Reuters.

The bank now expects oil at $100 in the third and fourth quarters of this year, lifting its previous Q3 and Q4 forecasts from $90 and $87.50 a barrel, respectively.

“The key oil products markets (gasoline, jet fuel, and gasoil/diesel) all show strong crack spreads, steep backwardation, and inventories that have fallen to low levels. None of this signals weakness,” Morgan Stanley analysts wrote in the note.

The bank is the latest investment institution to predict that oil is headed to triple-digit territory as soon as this year, amid resilient demand, falling inventories, and declining spare capacity at OPEC+ as the group ramps up production.

Triple-digit oil “is in the works” for the second quarter this year, Francisco Blanch, head of global commodities at Bank of America, told Bloomberg last week. Demand is recovering meaningfully, while OPEC+ supply will start leveling off within the next two months, Blanch said, noting that it will be only Saudi Arabia and the UAE that can produce incremental barrels to add to the market.

Oil prices could hit $100 this year and rise to $105 per barrel in 2023, on the back of a “surprisingly large deficit” due to the milder and potentially briefer impact of Omicron on oil demand, Goldman Sachs said this week…

…click on the above link to read the rest of the article…

Peter Schiff: The Fed Made This Bed and Now We Have to Lie In It

Peter Schiff: The Fed Made This Bed and Now We Have to Lie In It

Inflation is running hot. Economic data is running cold. Stocks and bonds are under pressure. The Fed is scrambling. In his podcast, Peter Schiff talked about the trajectory of the economy. He said we’re on the cusp of the most obvious crisis that virtually nobody saw coming. The Federal Reserve made this bed. Now we have to lie in it.

Stocks and bonds are off to a rough start in 2022 with the expectation of rate hikes on the horizon. In fact, many analysts now think that the Fed could raise interest rates five times in 2022. And some also think the first hike in March could be 50 basis points.

Hedge fund manager Bill Ackman called a .5% rate hike “shock and awe.”

Peter called this “ridiculous.”

It’s not shock and awe. When you’re talking about 7% inflation, a move from zero to 50 basis points is still recklessly low interest rates. And for a Fed that’s actually serious about fighting inflation, raising interest rates to 50 basis points is not nearly enough for the task at hand.”

Even so, a .5% rate hike could have a profound impact and pop the bubble economy.

Given the incredible amount of leverage that’s in the system, a 50 basis point rate hike can still do a lot of damage. And I think Bill Ackman is underestimating the extent of the damage. But not just the damage from the initial hike, but from all the subsequent hike, which aren’t going to do any good about slowing down this inflation freight train.”

Peter noted the price of oil hit has continued its upward trajectory this week. The price of oil is at a seven-year high with plenty of room to keep running up. In 2021, a lot of producers ate their rising costs

…click on the above link to read the rest of the article…

Oil Spikes To Fresh 7-Year High After Key Iraq-Turkey Pipeline Explosion

Oil Spikes To Fresh 7-Year High After Key Iraq-Turkey Pipeline Explosion

Despite dollar strength today (and more worrisome ZeroCOVID actions from China), oil prices continued to rise but news after-hours that an explosion knocked out a major pipeline sparked more upside.

Little is known about the cause, but the explosion at a pipeline connecting Northern Iraq and the port of Ceyhan in the Mediterranean has taken 450kb/d of supply offline in an already very tight crude oil market.

The pipelines have been halted before: Back in 2012 blasts blamed on saboteurs halted the link for several months.

The headlines sent oil prices spiking with WTI topping $86 for the first time since Oct 2014 (Brent neared $89)…

This news follows a ballistic missile attack over the weekend, where Iranian-backed Houthi rebels in Yemen targeted oil infrastructure in the UAE.

Pipeline operator Botas said the fire has been brought under control and cooling operations were under way.

Botas said the it would reopen once the “necessary measures” had been taken, but gave no indication of timing.

Analyst Reveals His Gold Prediction Secret: It’s All About Oil

Analyst Reveals His Gold Prediction Secret: It Is All About Oil

© Public domain, via National Institute for Occupational Safety and Health

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Gold to rise alongside oil, buying the platinum’s dip, and the tale of a unique 54-pound gold brick.

Gold should follow oil as the latter skyrockets in price

It’s well-known that when gold soars, silver invariably follows. This kind of close correlation could soon be established between gold and another commodity that has been soaring recently: oil. Many might not be familiar with the gold-to-oil ratio, which tracks how many barrels of oil are necessary to buy an ounce of gold.

Here’s the summary of this argument:

The gold to oil ratio is an important indicator of the global economy’s health. Because gold and crude oil are both denominated in US dollars, they are strongly linked. That is because as the US dollar rises, commodities priced in USD fall, and vice versa. As the dollar drops, commodities generally go up.

Since fuel prices play a huge rule in inflation calculations (the Consumer Price Index is about 1/3 energy prices), higher oil prices means more inflation. Inflation drives gold-buying, and additional demand drives gold prices higher. Further, Kitco contributor Rick Mills argues, spikes in oil prices stunt economic growth. And economic pessimism is usually very good for gold.

A little bit more about the gold to oil ratio… Its historical average is 16, but it has been on quite a ride as of late. It hit a high of 91 last April due to the shutdowns, and has since returned to a more reasonable 25. It’s still way off its average, and a proper return would have to come from either falling oil prices or rising gold prices.

…click on the above link to read the rest of the article…

Pretty Please? US Trying To Persuade Russia To Lift Oil Output

Pretty Please? US Trying To Persuade Russia To Lift Oil Output

Interfax is reporting Thursday that the United States is urging Russia to raise oil output in order to lower global prices, following the Biden administration’s Tuesday announcement it plans release 50 million barrels of crude from the U.S. Strategic Petroleum Reserve, amid predictions of $100 oil.

“The US has been putting pressure on OPEC and its partners in recent weeks to raise oil output, overtures which have been rebuffed,” Bloomberg reports based on statements from the Russian Foreign Ministry indicating the ongoing US attempt to persuade Moscow.

“OPEC meets next week, and officials will be mulling whether to continue easing its output curbs by 400k BPD per month, or perhaps pause given nations of consumers will be releasing a total of 70-80mln barrels ahead,” the report notes.

Perhaps the Kremlin would be more willing to play nice at a moment Washington comes calling, hat in hand, if it weren’t subject of US sanctions against Russian officials and constant allegations of political ‘interference’ in the West, with Putin widely cast in American media as this decade’s big bad geopolitical bogeyman.

At the end of October Russian President Vladimir Putin hinted that the OPEC+ cartel might put out more barrels than was previously announced, but also noted “Not all countries are able to significantly raise oil production.”

“Currently, the OPEC+ countries are increasing production volumes, even slightly more than they agreed to do, but not everyone can do it. Not all oil-producing countries are able to quickly increase oil production. This is a long-term process, a long cycle,” Putin said at the time in front of the Valdai discussion forum.

He then took his familiar swipe at the European and Western hysteria and obsession with “going green”…

…click on the above link to read the rest of the article…

365 Days of Climate Awareness 88 – Peak Oil

365 Days of Climate Awareness 88 – Peak Oil

Too much demand causes oil prices to rise to an unsustainable level, leading to the oil market’s collapse.

This is another topic, like eutrophication, which is not specifically part of the global warming problem, but it is of direct importance to society and to our use of petroleum. Peak oil theory states that, since petroleum is a finite resource, while humanity is not in imminent danger of running out of recoverable oil, the remaining oil will be increasingly hard to obtain, requiring more time and resources, becoming a less efficient process which is increasingly not beneficial to the economy or humanity.


In 1956 Marion King Hubbert, a geologist for Shell Oil, was commissioned to report on future oil recovery in the United States. After a statistical study of all available oil field data, Hubbert developed a bell-curve model for conventional crude oil production predicting a peak in the early 1970’s. In fact conventional oil—wells drilled on land, without the application of advanced recovery techniques—peaked slightly before Hubbert’s prediction, topping out at 9.5 million barrels per day (mmbd). Similarly detailed information is not available for oil fields in other countries—Saudi Arabia is not about to give out detailed information about production and reserves, which would compromise its geopolitical strength, for example—so similarly detailed predictions cannot be made for the planet as a whole.

Furthermore, unconventional oil production has increasingly come to dominate the market, with offshore and fracked wells leading to new peaks in production, notably in the United States (which currently leads the world in crude oil production at slightly over 10.5 mmbd). So what to make of a theory which was correct on its initial terms—predicting maximum onshore oil production in the United States—but avoided predictions for the markets which developed later, and have led to later, higher production?

…click on the above link to read the rest of the article…

Saudis, Russians Consider Pausing Oil Production Increases In Retaliation To Biden SPR Release

Saudis, Russians Consider Pausing Oil Production Increases In Retaliation To Biden SPR Release

When commenting on yesterday’s SPR release announcement by the Biden admin and several assorted hanger-on nations – which has backfired spectacularly sending the price of oil soaring now that the rumor can no longer be sold so the news has to be bought in line with every single SPR release in the past…

… we said that not only was the release far to smmal, but that in retaliation for the SPR release, “OPEC could easily consider halting its production hikes to offset the detrimental SPR impact of lower oil prices on the needed recovery in global oil capex, likely justifying such action as prudent in the face of COVID demand risks.

Well, fast forward just a few hours when moments ago the WSJ reported that the leaders of OPEC+ and the world’s two top oil producers Saudi Arabia and Russia, are considering a pause to their recent efforts to provide the world with more crude, citing to people familiar with those discussions. The move, as expected, is in retaliation to Washington releasing tens of millions of barrels of oil in an effort to lower prices.

As a reminder, OPEC+ is meeting next week to review the long-term deal they reached earlier this year to boost their collective oil output – the deal involves boosting output by 400,000 barrels a day each month through next year, until the group hits its pre-pandemic pumping level and follows a sharp cut in output in 2020 as demand evaporated amid Covid-19 lockdowns.

However, it now appears that OPEC+ may change its mind and not raise output at all; and while Biden is quick to note that oil prices have hovered near multiyear highs, OPEC and other forecasting agencies have struggled to predict demand amid the on-again-off-again nature of Covid-19 restrictions…

…click on the above link to read the rest of the article…

The End Of Venezuela’s Oil Era

The End Of Venezuela’s Oil Era

Venezuela, once Latin America’s largest oil producer and a founding member of OPEC, has seen its economically vital oil industry collapse triggering one of the worst economic and humanitarian crises of the century. The pain is far from over for Venezuela’s people and the country’s failing economy. Before 1920, Venezuela was a poor agricultural country facing many of the developmental issues plaguing Latin America. The country’s journey to becoming a crude oil superpower, leading petroleum state, and founding OPEC member began in 1914 with the drilling of the Zumaque well in the Mene Grande field on the eastern shores of Lake Maracaibo. This was Venezuela’s first commercial oil well and it launched a monumental oil boom that transformed the country and by 1950 saw it become the world’s fourth wealthiest nation per capita. Venezuela was not only heralded as Latin America’s richest nation but also its most developed. By the 1970s, the country, which is now a socialist dictatorship, was lauded as Latin America’s most stable democracy at a time when most nations in the region were ruled by military dictatorships. By the 1980s, Venezuela’s democracy was unraveling because of a global recession and sharply weaker oil prices. These events weighed heavily on the economy, and government spending, causing the country to spiral into debt. By the late-1980s Caracas had turned to the International Monetary Fund for help. The IMF recommended market-oriented neoliberal economic reforms including savage budget cuts, primarily impacting social programs such as public health and education. When these reforms were implemented by Caracas, they triggered considerable civil unrest. The reforms also sparked runaway inflation which only worsened the suffering of every-day Venezuelans. Those events illustrated the substantial dependence of Venezuela’s economy on oil and the country’s vulnerability to weaker prices…

…click on the above link to read the rest of the article…

Why U.S. Shale Won’t Go To War With OPEC+

Why U.S. Shale Won’t Go To War With OPEC+

  • OPEC+ will be very happy with where oil prices currently are and is unlikely to change its course anytime soon
  • The U.S. does have the ability to increase production, but U.S. shale does not have support from either the government or shareholders to boost production significantly
  • The two bearish variables that could drag prices down in the near term are a strong dollar and the continuation of inventory builds

For years, the Kingdom of Saudi Arabia’s economy has suffered from low oil prices. Since 2014 when it increased supplies to try and break American shale producers, Saudi Arabia has had to struggle with a flooded market. Its cash reserves have been drawn down by hundreds of billions and it had to sell a small percentage of its prize asset, Saudi Aramco. At the same time, Saudi Arabia’s Vision 2030 plan fell behind in its lofty goals of diversifying its economy. I discussed this at some length in a prior Oilprice article. Now with the price of Brent – the benchmark against which Saudi Arabia prices its production – finally back above the $80 mark, the Kingdom is beginning to refill its coffers. So it was no great surprise when the Saudis and the Russians, the two principal members of the OPEC+ cartel, roundly rejected a demand from President Biden to increase production to ease the world’s energy crisis.

Up to this point, there had been some lingering concern on the part of OPEC+ that too high a price would reinvigorate the shale industry that had finally come to heel in early 2020. Restraint on the part of shale drillers since then has encouraged them that a new “war” for market share won’t be the result…

…click on the above link to read the rest of the article…

Saudis Respond To Biden: Your Energy Crisis Isn’t Our Problem

Saudis Respond To Biden: Your Energy Crisis Isn’t Our Problem

US gas prices at the pump (national average) are at $3.421, having soared since President Biden was elected – much like they did when President Obama was elected – to some of the highest prices in history…

President Biden refuses to take any blame for this. Instead of realizing the climate-crisis-focused policies are impacting the fossil fuel supply chain before the replacements are ready to fill the void, he has blamed COVID and OPEC+ – driving America to be more dependent on foreign oil rather than increase production domestically.

“Oil is not the problem… The problem is the energy complex is going through havoc and hell.”

Of course, always wanting to signal their virtue and follow the narrative – and amid the farce that is COP26 – Democrats have decided that this is the right time to offer a bill that stops banks from financing fossil fuel plans.

Senators Edward Markey and Jeff Merkley introduced the bill which would would require the Federal Reserve to mandate that major banks stop the financing of projects that emit greenhouse gas emissions.

The legislation would prohibit financing of new or expanded fossil fuel projects by 2022 and prohibit the financing of all fossil fuel projects by 2030. It would also prohibit thermal coal financing by 2025.

Which, of course, will lead to less development, lower supply, and higher and higher prices…

…click on the above link to read the rest of the article…

BP: Oil Demand Has Already Topped 100 Million Bpd

BP: Oil Demand Has Already Topped 100 Million Bpd

  • BP: Global oil demand has already exceeded the threshold of 100 million barrels per day
  • Demand will continue to increase and reach pre-COVID levels at some point in 2022

Global oil demand has already exceeded the threshold of 100 million barrels per day (bpd) last seen before the pandemic, supermajor BP estimates.

Demand will continue to increase and reach pre-COVID levels at some point in 2022, BP’s chief financial officer Murray Auchincloss said on Tuesday at a conference call following the release of the Q3 results.

“Somewhere next year we will be above pre-Covid levels,” Auchincloss said on the call, as carried by Bloomberg.

“OPEC+ is doing a good job managing the balance, so we remain constructive on oil prices,” BP’s CFO added on the call about BP’s third-quarter results, which beat analyst estimates.

Brent Crude prices rose by 7 percent to average $74 per barrel in the third quarter and moved above $80 per barrel in recent weeks, Auchincloss said at the Q3 results presentation.

“This reflects the strong rebound in oil demand as the impact of COVID eases as well as the measured increases in OPEC+ supply. As a result, inventories have reduced back toward pre-pandemic levels. As we look ahead to the end of the year, we expect oil prices to be supported by continued inventory draw-down, with the potential for additional demand from gas to oil switching,” BP’s executive added.

BP’s view about global oil demand is generally in line with most analyst and industry estimates pointing to consumption returning to pre-pandemic levels as soon as this quarter or early next year.

…click on the above link to read the rest of the article…

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