Given the short memory of most voters, the admin either sees relief on the horizon or plan to keep the SPR open indefinitely. And with 222 days until midterms, that could mean seriously depleting reserves.
Can’t help but think there’s better ways to drum up political points, but that’s for another thread.
It’s worth noting, Biden had already released the largest amount from the oil reserves in history prior to 2022 beginning. At this point in the year, and with his current proposed plan of continuous release, we’ve entered uncharted territory.
Im on the same thoujght process with nano and bear. Its worth risk reward playing oil for me with this down price.
GS report re: the SPR release:
TLDR; this isn’t going to do much to resolve the longer term oil deficit—it’s just kicking the can down the road.
This is in line with earlier announcement to release up to 30 million barrels from strategic reserve.
GS makes fair points. In addition to reducing incentives for oil producers to invest more, other reasons this could be an undesirable idea are:
On the other hand, this does buy time:
There’s also the element of midterms coming up, and 180 days can slide into that time period.
All in, this will probably soften the blow of rising gas prices, but the fundamentals will still win in the long run.
It doesn’t take a rocket scientist to realize that the -3M bpd we stopped importing from russia and offset it with only 1M bpd releasing from the SPR still gives us a minimum net loss of 2M bpd. Reserves are at 568M barrels last updated 3/25.
US oil companies have very little incentive to increase production or sink a bunch of money into expanding operations right now as they would only drive down the price of their product, and any deal with a foreign company would also drive down prices, and finally the administration has demonstrated since day one they are very anti-oil and will likely just stab them in the back as soon as prices come back down. There is too much risk and essentially zero reward.
The problem is only going to be exasperated as more people are returning to the office and those daily commutes are going to bring back more demand. Also, with all the COVID finally getting behind us, people are going to want to get out and travel this summer. Like REALLY travel, not just stay in-town or even in-state.
Rig count has only increased about 10% since the beginning of the year, and current production is only about 11.6M bpd. There’s only about 670 rigs going, when 900-1000 was the pre-covid norm.
I think the best bet is on oil & gas futures, equipment / drilling companies, and the smaller oil & gas companies willing to risk it and make some quick money while the big guys just sit on their hands. The next 4 months prices are going to continue to go up unless some miracle deal can be struck with some oil-rich countries, and said country can actually meet the agreed quotas.
Credit card companies are having to make adjustments to their systems to allow people to make larger gas purchases at one time due to the high prices.
The latest from OPEC+'s March production numbers, though “takes a bite out of Russia” might be stretching it, given the details they share.
OPEC’s 13 members raised output by 60,000 b/d to 28.73 million b/d, but that was more than offset by a 160,000 b/d decline by the bloc’s nine allies, who pumped 13.91 million b/d.
With the net decline of 100,000 b/d, the widening gap between the OPEC+ production and quotas jumped to a record-high 1.24 million b/d—casting further doubt on the group’s ability to meet growing global oil demand, which many analysts expect to return to pre-pandemic levels in 2022.
Non-OPEC leader Russia, hit by western sanctions targeting its financial sector, saw its crude production fall to 10.04 million b/d, the survey found. Many traders have stopped transacting with Russian commodities, and analysts expect production shut-ins to build up in April and May, though some flows are shifting to Asian customers.
(Emphasis added - can’t just turn off oil spigots like a tap, they need time.)
No idea how compliance % is calculated.
I saw another thread opened for a case against oil, so I wanted to call out that the Fed states they expect oil prices to stay high for the coming months, in the March meeting minutes released earlier this week:
Prices of commodities that Russia exports, particularly oil and natural gas, soared over the period. While oil prices partially retraced late in the period, options prices suggested considerable probability that oil prices could remain elevated or rise further in the months ahead.
BNO was the play today, probably still is for the near term. All of the news of strategic reserves releasing supports this, no reason to dip into reserves otherwise.
Still early but oil futures and some energy companies seemed to have rebounded from yesterday’s sell off.
Biden administration’s big brain idea just announced they are going to bump up the amount of ethanol in fuel from 10% to 15%, which should save consumers about 10-cents at the pump (after increasing ~$1.50 on average)…
I don’t think that Brandon news is going to have any groundbreaking impact long term. This 15% ethanol content is already permitted across the U.S. year round SAVE AND EXCEPT June-August. In those months, normally only 10% is permitted. This is something that Orange Man did in the past. It was shut down by the courts then.
I see that futures and the teucrium CORN etf both beating the market by half a percent.
I don’t see this sustaining itself.
Looks like Biden finally gave in with no relief to the oil squeeze. They are finally going to resume the sale of oil and gas leases on federal land beginning next week.
Today likely marks the end of a 4 day bull run for oil. I’m curious how much of a pullback we will see.
Other random oil bullshit.
https://www.reuters.com/article/atlas-sand-ipo-idAFL3N2WG2EK
This fracking IPO announcement probably good sign for exploration and development but I think you’d have to be Cathy Woods to actually buy in. Oilfield IPOs sketchy. Last one that launched was SND, and according to some random in the seekingalpha comments “They claim it could fetch 2-3 billion in a listing and I’m showing revenue around $121.5 million annually. Meanwhile… $SND’s revenue is currently estimated to be $140 million and their market cap is $205 million. What am I missing here?”
Haliburton fleet is still completely rented out per their conference call this morning. Further signal for high demand for oilfield services.
Energy giants have earnings end of month. XOM CVX COP to watch for the next 2 weeks.
I’m using this time to open positions in DVN and OXY
I’m thinking about opening a position in oil/gas either today or tomorrow depending on how their movement goes. There is nothing that can stop prices from continuing to climb for the next several months.
I’m already in some UNG but HPK looks interesting from a short interest point of view.
Only problem is it doesn’t seem you can purchase options 
Natural Gas futures are heading higher this morning. I would look for entries this week or earlier next week. Remember that the weather is changing and natural gas use is expecting to move higher with the Ukraine war.
Natural gas futures rollover at 10:30am et today too. We will likely see a spike for that minute just like we saw from oil ETF futures yesterday.
Beaker, what options would be best to play for that scenario? UNG, BOIL or do you have a specific company you are looking at for this?
