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Oil Inventories
Stockpiles of crude oil at the largest US storage hub in Cushing, Oklahoma, are falling closer to critically low levels. Six weeks of declines have depleted the cache to 22.9 million barrels, which isn’t far off the 20 million - 22 million barrel cushion that most analysts deem essential in maintaining the operational integrity of the facility. Since Cushing is the delivery point for US benchmark crude futures, traders are paying a premium for West Texas Intermediate to be delivered sooner due to dwindling inventories. Should Wednesday’s weekly report from the US Energy Information Administration show a further decline, expect that premium to move higher
"The flow of capital into new oil supply is just not what it was like in the last 30 years," he said. "So what that's doing is driving the long-term price, the back end of the curve, up to $80, or north of $80. We think it probably normalizes around $100," he added.
Oil prices have rallied again in recent months as key oil producers Saudi Arabia and Russia press ahead with production cuts in a bid to maintain price stability.
Crude prices are on track for their fourth-monthly win, with the Brent contract, the international benchmark, rising above $90 a barrel.
Oil prices are set to normalize at around $100 a barrel, according to a top JPMorgan energy analyst.
"Put your seatbelts on. It's going to be a very volatile supercycle," Christyan Malek told Bloomberg.
Crude prices could hold at elevated levels, thanks to a trifecta of production cuts, high interest rates, and lack of investment in the oil industry, he added.
Expect $100 to be the new normal for oil prices thanks to production cuts, higher interest rates, and lack of investment, JPMorgan energy analyst says
good find gator.
The bank's forecast reflects the ongoing trend in the global oil markets where prices have steadily increased. The price of Brent oil, a benchmark for international crude oil prices, has been rising consistently, indicating a robust demand and tightening supply.
This prediction by JPMorgan comes amid a global economic recovery from the pandemic, which has seen an uptick in energy consumption across various sectors. The consequent rise in demand for oil and other energy commodities is putting upward pressure on their prices.
Brent oil prices could reach $150 per barrel, says JPMorgan
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Investing.com
Sun, September 24, 2023 at 10:56 PM EDT·1 min read
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In a recent forecast, JPMorgan has predicted a potential surge in Brent oil prices to $150 per barrel. This prediction was made on Monday, as the financial institution observed escalating oil rates that have been on a consistent upward trajectory.
Oil has added about 25% since end-June, heading for the biggest quarterly gain since March 2022 amid supply curbs by OPEC+ leaders Saudi Arabia and Russia, and brighter economic outlooks in the US and China. The surge has rekindled talk of the possibility of $100-a-barrel crude, posing increasing price pressure for importers.
Higher oil prices are bad news for the world's central banks, which have been trying to tame high inflation since last year. Energy is a key input for economic activities, so higher oil prices generally lead to inflation.
Oil prices have gained over 10% so far this year following output cuts from Saudi Arabia and Russia.
The gains could boost Russia's oil revenues. Russia is subject to a $60-a-barrel price cap.
Russia has shipped half of its seaborne crude without Western insurance this Spring — meaning it may be selling at higher prices, per the FT.
Oil prices are nearing $100 a barrel, throwing a spanner into the US Federal Reserve's fight against inflation — but at least one party would be rejoicing: Russia.
Crude has jumped more than 30% since mid-June, with analyst predictions of $100 a barrel becoming less rare. Still, there are technical indications that the rally is overdone. Brent’s 14-day relative strength index has been above the threshold signaling a potential pullback for much of the past two weeks.
“Crude flat price and structure continues to rip,” said Keshav Lohiya, founder of consultant Oilytics. “The crude market is now firmly in OPEC’s hands as it’s up to Saudi now when to start reversing some of these voluntary cuts.”
On the demand side, the picture has brightened on signs the US may be able to avoid a recession, while data from China on Friday beat economists’ estimates, suggesting the worst of the downturn is passing. The tightening market is also reflected in surging fuel prices, with diesel at a seasonal record in New York.
Oil Posts a Third Weekly Gain With Tighter Markets in View
Oil set to rise for a third week on strong China economic data
The rally comes as OPEC data shows the industry faces a supply shortfall of 3 million barrels per day next quarter.
Saudi Arabia and Russia recently announced an extension of unilateral output cuts through year-end, raising worries of tight global inventories. That's on top of OPEC+ reductions announced last year.
"The math is simple—declining supply and rising demand equal higher prices," Adam Turnquist, chief technical strategist for LPL Financial, recently wrote in a note to investors.
Oil prices hit 2023 highs as market faces supply squeeze
WTI Oil Ends Above $90 for 1st Time in 2023
By
Dan Molinski, Dow Jones Newswires
The US crude-oil benchmark WTI finishes above $90 for the first time this year, ending the day up 1.9% at $90.16, the highest settlement price since Nov. 7, 2022.
"The International Energy Agency's report anticipates a fourth-quarter deficit in global supply as Saudi Arabia and Russia prolong supply cuts through the end of the year," says Brian Swan at Schneider Electric in a report. "OPEC+ exhibits remarkable pricing power, adeptly attempting to raise prices without significantly affecting demand. This is attributed to OPEC+'s considerable market share, alliance with Russia, and the inelastic nature of non-OPEC supply. Should OPEC+ continue to enforce production and export restrictions, oil prices are expected to remain stable until high prices influence gasoline demand."
Tight supply to underpin prices
The decision by these two major producers to limit supply will result in a market deficit through the fourth quarter, the International Energy Agency said in its monthly report, published Wednesday.
The prospect of tighter markets is likely to underpin prices in the coming months, the Organization of Petroleum Exporting Countries also noted in its monthly reports earlier this week.
OPEC also retained its forecasts for robust growth in global oil demand this year and next, saying "pre-COVID-19 levels of total global oil demand will be surpassed in 2023."
Oil Rally Picks Up Steam as US Benchmark WTI Hits $90 a Barrel
U.S. crude futures surpassed $90 per barrel on Thursday for the first time since November 2022. West Texas Intermediate (CL=F) jumped 1.6% to touch a daily high of $90.26 by mid-morning. Brent crude futures (BZ=F) also rose to hover past $93 per barrel.
Oil has been on a steady rise over the past three months. Crude futures are up more than 30% since late June amid a tight supply squeeze following OPEC+ production cuts and unilateral output reductions extended by Saudi Arabia and Russia.
Oil prices set a fresh 10-month high as investors anticipate a supply shortfall throughout the rest of the year.
Brent crude oil added 0.7% to $92.55 a barrel, its highest level since mid-November 2022. WTI added 0.8% to $89.23 a barrel.
Brent has now risen in 11 of the last 15 trading sessions as Saudi Arabia's oil supply cuts bite, cuts that Riyadh has said it will continue until the end of the year.
OPEC and the IEA both issued reports this week that foresaw a sharp deficit forming towards the end of the year if cuts remain in place. That could lead Brent to hit $100 a barrel, said ANZ in a note.
Oil Hits Fresh High on Supply Deficit Forecasts
Ecopetrol has made an effort to incorporate natural gas as an element of the green transition by investing in technology in what Roa called an "important local bet."
"We have five or six important (renewable energy) projects that we're looking to participate in," he said, without giving details due to confidentiality agreements.
"Between now and 2030, we must have incorporated nearly 1,900 megawatts in non-conventional renewable energy sources and by 2050 between three and five new gigawatts of renewable energy, that is the goal and aspiration that Ecopetrol has in the energy transition," Roa said.
The company spends some $500 million a year on power supplies, he said, noting the aim was to be self-sufficient through green hydrogen generation and still have enough to export.
Tuesday's rally occurred after OPEC said in its monthly report that supply shortfalls could reduce global crude inventories by 3.3 million barrels a day in the fourth quarter. That would represent the biggest global deficit since 2007.
Crude oil prices rose to a 10-month high on Tuesday after OPEC and the EIA predicted surging demand would keep prices elevated the rest of the year.
The price for November deliveries for Brent crude rose 2% to as high as $92.40 a barrel.
The rally came after OPEC said supply shortfalls could reduce crude inventories by 3.3 million barrels a day in the fourth quarter.
Crude Oil Prices Hit 10-Month High as OPEC, EIA Suggest Demand Could Keep Prices Elevated
Though the OPEC has often justified its production cuts as a way to keep oil markets balanced, its data shows that the reductions are placing downside pressure on global stockpiles.
As an example, commercial crude stocks among members of the Organization for Economic Cooperation and Development were 114 million barrels below their 2015-2019 average.
According to Bloomberg, Saudi Arabia may be aiming to bring oil price levels up to $100 a barrel as a way to finance costly domestic projects.
By the fourth quarter, that deficit is projected to widen, forcing countries to tap oil stockpiles to cover the shortfall. If OPEC production stays flat, as members have indicated, inventories will shrink by 3.3 million barrels per day, the most since at least 2007, according to Bloomberg.
Amid tight global supplies, the oil market is expected to face its biggest deficit in over a decade.
That's as Saudi Arabia has extended its output cuts, while Russia plans to continue limiting exports.
Crude oil prices rallied again on Tuesday after OPEC released market projections.
Saudi Arabia's output cuts will exacerbate tight global supplies, with the oil market expected to face its biggest deficit in over a decade.
The biggest oil deficit since 2007 will hit in the 4th quarter as Saudi Arabia cuts supply
The latest data published by OPEC show why the kingdom’s supply squeeze, amid a period of record demand, has sent oil prices surging beyond $90 a barrel in London. Riyadh announced last week it will extend an extra 1 million-barrel-a-day output reduction until the end of the year, even though markets are already tightening.
World oil inventories, having depleted sharply this quarter, are set for an even steeper drop of roughly 3.3 million barrels a day in the next three months, forecasts published in a report from the Organization of Petroleum Exporting Countries indicated on Tuesday.
If realized, it could be the biggest inventory drawdown since at least 2007, according to a Bloomberg analysis of figures published by OPEC’s Vienna-based secretariat.
Global oil markets face a supply shortfall of more than 3 million barrels a day next quarter — potentially the biggest deficit in more than a decade — as Saudi Arabia extends its production cuts.
OPEC Oil Data Show 3 Million-Barrel Shortfall on Saudi Supply Squeeze
The math is simple—declining supply and rising demand equal higher prices," Adam Turnquist, chief technical strategist for LPL Financial, recently wrote in a note to investors.
Demand data shows an upward trend, despite a choppy recovery in China post-COVID lockdowns.
"World oil demand is scaling record highs," said the International Energy
Oil prices hit new 2023 highs on Tuesday amid a supply crunch resulting from output reductions by Saudi Arabia and Russia.
West Texas Intermediate (CL=F) hovered just below $89 per barrel in midday trading. Brent crude futures (BZ=F) sat above $91 per barrel. The prices represent oil's loftiest levels since November 2022.
The rally comes as OPEC data shows the industry faces a supply shortfall of 3 million barrels per day next quarter.
Oil prices hit 2023 highs as market faces supply squeeze
Open interest on $100 calls over the next 12 months has risen from about 80,000 contracts in the middle of July to 120,000 today. Calls at $90 and $100 are the two most held strikes over the next 12 months and there has also been a smattering of cheap wagers on even higher prices as far out as 2025.
The oil market has shown signs of meaningfully tightening over the summer, with futures trading near multi-month highs as OPEC+ producers continue to rein in output and demand picks up. Recently oil market volatility has also been plunging, making it cheaper to buy options.
The bullish tilt also shows up in market pricing. Brent’s put skew — a gauge of how much more traders will pay for bearish put options over bullish calls — sank to its smallest level in two weeks on Thursday. WTI’s equivalent gauge saw a similar move.
Options Traders Eye Return of $100 Oil
There is a realization the economy is not falling off the map, and signs that demand is near record highs," said Price Futures Group analyst Phil Flynn. "People have to face the cold, hard reality that supplies are below average."
The appetite for oil in the United States has been robust, with commercial crude inventories declining in five of the most recent six weeks, according to surveys conducted by the U.S. Energy Information Administration.