Tuesday , July 27 2021

And just as it was, everyone stopped talking about $ 100 a barrel




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The crane secures wire, cable used for lowering and raising tools and other equipment in the well above Chevron Corp. well prepared for hydraulic breakdown in Perm's Basin on Thursday, March 1, 2018. & nbsp; Photographer: Daniel Acker / Bloomberg&copy; 2018 Bloomberg Finance LP

If there is one thing we know where crude oil prices move on the world market, no one really knows where the price of raw oil for the world market is moving. Just six weeks ago, oil reports mostly focused on "how high it was possible" since Brenta was $ 86 a bblu on October 3, while West Texas Intermediate (WTI) was $ 76 a bbl .

At that time, various bankers, investment companies and analysts could come closest to predicting the exact date when Brenta would be closed more than $ 100, returning goods to their glory in 2014. Officials from Saudi Arabia and Russia are engaged in debates on how much additional production should be placed on the market, as the US sanctions on Iran will be restored.

Then it was. From 3 to 3 March, 13 November (as I compile this piece), Brent and WTI dropped by about $ 21 / bbl, a 24 percent loss for Brent, and 28 percent for WTI. On November 13 marked the 11th day of trading that fell for WTI, as the price fell by more than $ 4 a barrel.

From that hard day six weeks ago, there were a number of factors to cause price weakening, the most significant being the ever-increasing US manufacturing speed. In fact, perhaps the only biggest factor for this week was a steep slide an estimate released last week by the US Energy Information Board (EIA) today's crude oil production has increased from week to week by 11.2 mmbopd to 11.6 mmbopd. Such a huge one-week jump seems incredible, and this week's estimates are often revised later, but that large number, coupled with a simultaneous big jump in an active cop, seems to intimidate the market.

Again, the market has already been a bit scary and current speculation about the slowdown in China's huge economy, as well as the resulting fourth quarterly monthly review in OPEC's projected growth in demand for 2019 (which is still a healthy growth estimate of 1.29 billion dollars) no doubt had their own impacts on the psyche in the market. & Nbsp; As I pointed out last week, all this behavior on the markets comes right at the time when US oil and gas producers are trying to complete their capital budgets and drilling programs for 2019, which increases uncertainty in a very unusual time.

Here's what we know: Over the past 12 months, if the latest environmental impact assessments are believed, total crude oil production in the US has grown somewhat stunning 2 million barrels per day, as advancing technology and increased efficiency allow manufacturers to brew bigger the volumes from each consecutive wells they hold. & nbsp; A reasonable person a year ago could have predicted that the US industry could achieve half of the total increase.

The result of all this additional US production entering the market has accelerated the pressure on OPEC and other exporting countries to adjust their volumes to keep the price of the goods at the desired level. Since Iran's export capability has become increasingly limited since July due to the re-use of US sanctions, Saudi Arabia and Russia have reacted by raising their own production levels to fill the "undo" they believed was created in global supply. & nbsp; With the gentle future, we now know that this was a misinterpretation of the real crude oil conditions, which suddenly seems to be unbalanced with the supply surplus.

All this helps in illustrating the original point: if Saudi Arabia and Russia do not know where the price of crude oil is moving, who really works? This explains why no one is talking about returning to $ 100 oil today.

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The crane secures wire, cable used for lowering and raising tools and other equipment in the well above Chevron Corp. oil wells ready for hydraulic breakdown in the Permian Basin on Thursday, March 1, 2018. Photographer: Daniel Acker / Bloomberg© 2018 Bloomberg Finance LP

If there is one thing we know where crude oil prices move on the world market, no one really knows where the price of raw oil for the world market is moving. Just six weeks ago, oil reports mostly focused on "how high it was possible" since Brenta was $ 86 a bblu on October 3, while West Texas Intermediate (WTI) was $ 76 a bbl .

At that time, various bankers, investment companies and analysts could come closest to predicting the exact date when Brenta would be closed more than $ 100, returning goods to their glory in 2014. Officials from Saudi Arabia and Russia are engaged in debates on how much additional production should be placed on the market, as the US sanctions on Iran will be restored.

Then it was. From 3 to 3 March, 13 November (as I compile this piece), Brent and WTI dropped by about $ 21 / bbl, a 24 percent loss for Brent, and 28 percent for WTI. On November 13 marked the 11th day of trading that fell for WTI, as the price fell by more than $ 4 a barrel.

From that hard day six weeks ago, there were a number of factors to cause price weakening, the most significant being the ever-increasing US manufacturing speed. In fact, the biggest factor this week was the US Energy Information Administration (EIA) estimate last week that daily crude oil production in the United States rose from week to week with 11.2 mmbopd to 11.6 mmbopd. Such a huge one-week jump seems incredible, and this week's estimates are often revised later, but that large number, coupled with a simultaneous big jump in an active cop, seems to intimidate the market.

Again, the market has already been a bit scary and current speculation about the slowdown in China's huge economy, as well as the resulting fourth quarterly monthly review in OPEC's projected growth in demand for 2019 (which is still a healthy growth estimate of 1.29 billion dollars) no doubt had their own psyche impact on the market. As I pointed out last week, all this behavior on the markets comes right at the time when US oil and gas producers are trying to complete their capital budgets and drilling programs for 2019, which increases uncertainty in a very unusual time.

Here's what we know: Over the past 12 months, if the latest environmental impact assessments are believed, total crude oil production in the US has grown somewhat stunning 2 million barrels per day, as advancing technology and increased efficiency allow manufacturers to brew bigger volumes from each consecutive borehole. A reasonable person a year ago could have predicted that the US industry could achieve half of the total increase.

The result of all this additional US production entering the market has accelerated the pressure on OPEC and other exporting countries to adjust their volumes to keep the price of the goods at the desired level. As Iran's export capability has become increasingly limited since July due to the re-use of US sanctions, Saudi Arabia and Russia have reacted by raising their own production levels to fill the "void" they believed to be created in global supply. Given the subsequent state of affairs, we now know that this has been shown by a false estimate of the actual crude oil conditions, which suddenly seem to be unbalanced with the surplus supply.

All this helps in illustrating the original point: if Saudi Arabia and Russia do not know where the price of crude oil is moving, who really works? This explains why no one is talking about returning to $ 100 oil today.


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