OP article "Traders haven't been this bullish on oil since August"

[Bla2 + 31]

When EVERYONE  thinks something .  .  .  EVERYONE is usually wrong. 

https://oilprice.com/Energy/Crude-Oil/Traders-Havent-Been-This-Bullish-On-Oil-Since-August.html 

"Traders haven't been this bullish on oil since August" but then September followed August and taught them a lesson.  

Is it time for a contrarian trade ?

1. Oil trades on news and rumors.  Not Fundamentals. Perception is reality .  .  .  until its not.

2. Oil was trading around $50 bbl before anyone heard about CV19.  Too much oil ?

3. Today a commodity trader that suggests he has inside knowledge said that OPEC doesn't want oil to trade above $50 bbl until after the summer seasonal demand kicks in next June/July because they don't want U.S. shale to ramp up before demand shows. LOL. 

4. Libya up to 1.3 mm bbl day going to 1.7 mm bbl/day.

5. Under Biden Iran will add new 2 mm bbl/day second half of 2021.

6. Guyana and Surinam just getting started. Brazil up to 2.8 mm bbl/day and growing fast.  Brazil now #3 oil exporter to China and there is nothing Saudis/OPEC can do about it. 

7. UAE will agree to extend production cuts .  .  .  .  but will they comply ? Nobody else does. 

8. Iraq says they will comply.  Never have .  .  .  Never will. OPEC is a mirage, a house of cards that will come tumbling down. 

9. Vaccine hope is getting ahead of itself.  The Pfizer and Moderna have applied for "Emergency Use Authorization" . That will allow high risk individuals to get vaccinated. The FDA will require additional monitoring for safety for general public.  Dr. Fauci said it will be next summer before "we get back to close to normal". That's if a critical mass agree to get vaccinated.  Fauci says U.S. needs 70% vaccinated. That's 245 million people.  I don't see it. 

The big question is when does the market absorb the reality that there is too much oil ? Too much before the pandemic, too much now .  .  .   to much in the future ? 

Any analyst or consultant projecting oil demand over the next 10 , 20 , or 30 years are just guessing.  They have no clue.  In my opinion for the foreseeable future there is too much oil.  

Like Chevron CEO Michael Wirth said about U.S. shale industry , "Cut costs or die"

But OPEC can't cut costs.  Saudis can't cut cost lower than $2.00 bbl.  Is Saudi floating bond issues thru Aramco "until the market come back" just wishful thinking ?  

Some of the European Oil majors prefer investing in conventional oil fields, many in OPEC countries.  The truth be told they have no choice as they have no.major shale holdings.  These Euro majors say these conventional fields are low cost .  .  .   .  but they don't include the cost of the substantial payments to the host country. Nor do they mention the risk of possible unrest as these countries face fiscal budget nightmares.

TOO MUCH OIL 

Is the UAE concerned about stranded assets ?

All OPEC , Brazil , Norway and others are committed to increasing production ?  Why ?  Sell it while you can.  It's a Hobson's choice.  They need to produce and sell more to make up for price drop, but the more they produce the more the price drops.

Be glad we're not them. 

Oil is not a short .   .   .   yet.  😀

With the oil Mkt you can be right bit still be wrong.  It's a matter of timing which is essentially to successful trading. 

My guess is the excitement over the vaccine , OPEC cuts , etc will fade in January/February .  

Then the market will realize that OPEC production is still cut 7.2 mm bbl/day , world storage is pretty full, most OPEC members ignore quotas, all Oil States have plans to increase production and most importantly that oil was trading around $50 before anyone heard of Coronavirus.

Too Much oil.  

Fitch Financial analysis projects 2021 Brent avg of $46 bbl.  Sure, that sounds about right. 

Edited December 7, 2020 by Bla2

[Bla2 + 31]

The FDA will not name the members of the Covid vaccine independent review committee until 2 days before the December 10th meeting date. 

The FDA said they will live stream the meeting.  This should be good.  Can't wait.

QUESTION : WHAT HAPPENS TO THE STOCK MARKET AND OIL MARKET IF THIS COMMITTEE QUALIFIES THE "EMERGENCY USE AUTHORIZATION" (EUA) BY NOTING THE POSSIBLE LONGTERM COMPLICATIONS ATTRIBUTED TO THESE NOVEL mRNA VACCINES ? 

Don't count your chickens before they hatch.

Just saying 

DR. Fauci says to acquire herd immunity they need to vaccinate 70% of the U.S. population .

350 million population X 70% = 245 Million people.   I don't see it.

Edited December 4, 2020 by Bla2

[Bla2 + 31]

 

[Bla2 + 31]

Good article by OP's Widdershoven.

Makes a few points similar to my post above. 

I don't understand how some argue that OPEC does not fully grasp or understand the predicament the oil States are in. They know full well the state of the industry.   They have to continue this facade as long as there are traders that react to their bull$#!€.  They have no choice, they are screwed coming and going. 

UAE will never abandon OPEC.  Threats are on way to get some relief. Look at Russia.  Of the 500k bbl increase just passed Russia is receives 125,000 of that .  1/4 .

Western Europe and Biden U.S. will use the pandemic economic stimulus as excuse to spend $trillions on "Green Energy" development. Thus accelerating the demise  of oil and the Oil States.  

When the pandemic ends OPEC has 7.2 million bbl production to restore. Oil was trading in the low $50s before the pandemic.  

https://oilprice.com/Energy/Oil-Prices/The-Worrying-Truth-About-The-New-OPEC-Agreement.html

I loved Saudi Oil Minister's statement last week where he stated he wants fair pricing for both consumers and producers and a fair return on capital investment.  

I remember back about 7 to 8 years ago when oil was trading between $90 to $100 bbl.  The Saudi Oil minister was asked if there was any relief for the consumer.  The minister replied, " We need $100 bbl to support our so is programs, $100 is a fair price". Can the Saudis get any more arrogant ? Another Saudi , "Let them eat cake moment"

I'm not crying for OPEC today.  

Edited December 6, 2020 by Bla2

[Tom Nolan + 2,443]

On 12/2/2020 at 4:42 PM, Bla2 said:

When EVERYONE  thinks something .  .  .  EVERYONE is usually wrong. 

https://oilprice.com/Energy/Crude-Oil/Traders-Havent-Been-This-Bullish-On-Oil-Since-August.html 

"Traders haven't been this bullish on oil since August" but then September followed August and taught them a lesson.  

Is it time for a contrarian trade ?

1. Oil trades on news and rumors.  Not Fundamentals. Perception is reality .  .  .  until its not.

2. Oil was trading around $50 bbl before anyone heard about CV19.  Too much oil ?

3. Today a commodity trader that suggests he has inside knowledge said that OPEC doesn't want oil to trade above $50 bbl until after the summer seasonal demand kicks in next June/July because they don't want U.S. shale to ramp up before demand shows. LOL. 

4. Libya up to 1.3 mm bbl day going to 1.7 mm bbl/day.

5. Under Biden Iran will add new 2 mm bbl/day second half of 2021.

6. Guyana and Surinam just getting started. Brazil up to 2.8 mm bbl/day and growing fast.  Brazil now #3 oil exporter to China and there is nothing Saudis/OPEC can do about it. 

7. UAE will agree to extend production cuts .  .  .  .  but will they comply ? Nobody else does. 

8. Iraq says they will comply.  Never have .  .  .  Never will. OPEC is a mirage, a house of cards that will come tumbling down. 

9. Vaccine hope is getting ahead of itself.  Dr. Fauci said it will be next summer before "we get back to close to normal". That's if a critical mass agree to get vaccinated.  Fauci says U.S. needs 70% vaccinated. That's 245 million people.  I dont see it. Herd immunity should take hold second half of 2021 with increased infected rate and partial vaccination.  What is going to be the "new normal".

The big question is when does the market absorb the reality that there is too much oil ? Too much before the pandemic, too much now .  .  .   to much in the future ? 

Any analyst or consultant projecting oil demand over the next 10 , 20 , or 30 years are just guessing.  They have no clue.  In my opinion for the foreseeable future there is too much oil.  

Like Chevron CEO Michael Wirth said about U.S. shale industry , "Cut costs or die"

But OPEC can't cut costs.  Saudis can't cut cost lower than $2.00 bbl.  Is Saudi floating bond issues thru Aramco "until the market come back" just wishful thinking ?  

Some of the European Oil majors prefer investing in conventional oil fields, many in OPEC countries.  The truth be told they have no choice as they have no.major shale holdings.  These Euro majors say these conventional fields are low cost .  .  .   .  but they don't include the cost of the substantial payments to the host country. Nor do they mention the risk of possible unrest as these countries face fiscal budget nightmares.

TOO MUCH OIL 

Is the UAE concerned about stranded assets ?

All OPEC , Brazil , Norway and others are committed to increasing production ?  Why ?  Sell it while you can.  It's a Hobson's choice.  They need to produce and sell more to make up for price drop, but the more they produce the more the price drops.

Be glad we're not them. 

Oil is not a short .   .   .   yet.  😀

With the oil Mkt you can be right bit still be wrong.  It's a matter of timing which is essentially to successful trading. 

My guess is the excitement over the vaccine , OPEC cuts , etc will fade in January/February .  

Then the market will realize that OPEC production is still cut 7.2 mm bbl/day , world storage is pretty full, most OPEC members ignore quotas, all Oil States have plans to increase production and most importantly that oil was trading around $50 before anyone heard of Coronavirus.

Too Much oil.  

Fitch Financial analysis projects 2021 Brent avg of $46 bbl.  Sure, that sounds about right. 

I am currently short oil with ETFs.

Last Tuesday, Zero Hedge had a good piece about the shorts on oil.

https://community.oilprice.com/topic/21658-“cushing-oil-inventories-are-soaring-again”-by-tsvetana-paraskova/?page=2#comment-138526

 

[Bla2 + 31]

13 hours ago, Tom Nolan said:

 

I am currently short oil with ETFs.

Last Tuesday, Zero Hedge had a good piece about the shorts on oil.

 

You might be a little early with your short in my opinion.

Remember oil now trades on news and rumors, not fundamentals.  

First the Financial News and Mainstream Media will be heralding the FDA approval of Pfizer and Moderna vaccines from December 10th to the end of the month.  

Second, Congress will surprise us with a stimulus package before Christmad that will send stock market higher , which will lead the oil Mkt higher.

THE BIG UNKNOWN : Does the FDA "Emergency Use Authorization" approval come with a qualification mentioning the possible longterm risk (2 years out) of a novel mRNA vaccine.  

The FDA has no experience approving an "Emergency Use Authorization" for a vaccine. 

Vaccines usually take 7 to 10 years.

If they don't mention risks, the risks will eventually become apparent in January/February, in my opinion.  

Additionally, all the other factors that apply to the decline of the Oil Industry will resurface.

Then Brent will avg $45 bbl in 2021 with or without vaccine.

Edited December 7, 2020 by Bla2

[Dan Warnick + 6,100]

5 minutes ago, Bla2 said:

You might be a little early in my opinion.

Remember oil trades on news and rumors, not fundamentals.  

The  Financial News and Mainstream Media will be heralding the FDA approval of Pfizer and Moderna vaccines from December 10th to the end of the month.  

THE BIG UNKNOWN : Does the approval come with a qualification mentioning the longterm risk (2 years out) of a novel mRNA vaccine.  

If they don't mention risks, the risks will become apparent in January/February.  Additionally, all the other factors that apply to the decline of the Oil Industry will resurface.

Then Brent will avg $46 bbl in 2021 with or without vaccine.

And in this day and age you don't know if they've already baked the news into the price.  Also, today's algos make it almost impossible to speculate for us little folks.

[Bla2 + 31]

13 hours ago, Dan Warnick said:

And in this day and age you don't know if they've already baked the news into the price.  Also, today's algos make it almost impossible to speculate for us little folks.

Algos prob responsible for Brent from $40 to $49.

Algos can turn on a dime.  "us little folks" can make a buck if we are good at anticipating the algos. 

Actual vaccine official  approval of an "Emergency Use Authorization" this month will give price per bbl another bump in my opinion.  

I think most assume, baked in, approval and 70% vaccination rate.

I believe the longterm safety factor, if not mentioned in approval, will eventually become an issue (Jan/Feb).

Even if you think there is a low probability of harm two years out and you are under 60 years old why take a chance.  

Let UK, Boris, Bush, Clinton and Obama have the vaccines.  They can do the experiment and let us know how it works out.  

Edited December 7, 2020 by Bla2

[Bla2 + 31]

Fitch sees Brent avg $45 bbl 2021

https://oilprice.com/Energy/Crude-Oil/Fitch-Sees-Brent-At-45-Next-Year.html 

"Vaccines are unlikely to significantly affect oil prices, Marinchenko told CNBC, going counter to widespread expectations that once a vaccine is widely available, oil demand will quickly rebound."

Edited December 6, 2020 by Bla2

[Bla2 + 31]

France's Total Chief Executive Pouyanne' :

"Pouyanné said last week that strict investment discipline would be vital for keeping up with a 2 degree Celsius pathway.

“Our focus is on projects that can withstand low oil prices and higher carbon costs. It’s the best way to protect against the risk of stranded assets,” the executive said.

The Total executive may be the only one with the honesty to mention "Stranded Assets" but you can be assured every Oil Company and OPEC member is thinking about it .   .   .   .  and worried about it.  

Increase production and sell it while you can. 

Some of us understood this over a year or two ago.

Edited December 6, 2020 by Bla2

[Bla2 + 31]

U.S. Shale Producers* and Brazil Producers fully support OPEC production cuts .   .   .   .   as they are laughing their ass off.

LOL

* Those Shale Producers/Consolidators that have have critical mass size. The survivors. 

Edited December 6, 2020 by Bla2