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"Biden Targets Another US Pipeline For Shutdown After 'Begging' Saudis For More Oil" - Zero Hedge Monday Nov 8th

Tom Nolan in Oil (General)

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https://oilprice.com/Energy/Oil-Prices/Goldman-Concerted-Release-Of-Petroleum-Reserve-Wont-Move-Oil-Prices-Much.html

Goldman: Concerted Release Of Petroleum Reserve Won’t Move Oil Prices Much

By Charles Kennedy - Nov 19, 2021, 8:30 AM CST

  • The oil market has already priced in the concerted release of crude oil from national reserves
  • The U.S. is expected to release between 20 and 30 million barrels

The oil market has already priced in the concerted release of crude oil from national reserves, Goldman Sachs has said, adding that the U.S. was expected to release between 20 and 30 million barrels, with the rest of the group likely releasing a combined 30 million barrels.

The United States talked to China, India, Japan, and South Korea about a joint release from strategic reserves in a bid to rein in crude prices and send a strong-worded message to OPEC. However, India and Japan have refused to release any crude from their strategic reserves. South Korea, according to a Reuters report, is also reluctant to tap its strategic reserve.

"Japan and South Korea have shown resistance to releasing reserves, so we're coming back up a little bit," Phil Flynn, a Price Futures Group analyst, told Reuters. "The market is going to continue to be nervous, because it is on guard from a release."

China, meanwhile, is preparing its second release of oil from the strategic reserve this year, but it has remained unclear whether the move was planned earlier or came in response to President Biden's effort to rally large consumers around its reserve release idea.

"Such a release would only provide a short-term fix to a structural deficit," Goldman analysts including Damien Courvalin and Callum Bruce said in a note cited by Bloomberg. "In fact, if such a release is confirmed and manages to keep oil prices depressed in the context of low trading activity into year-end, it would create clear upside to our 2022 price forecast."

Goldman Sachs has forecast Brent will average $85 per barrel during the final quarter of the year and $81.30 per barrel in 2022. Since its peak in October, the international benchmark has shed some 5 percent.

The investment bank is not the only one questioning the effect of a reserve release as a tool for lowering oil prices. The consensus among experts appears to be that a couldn't possibly be enough barrels to bring about a lasting decline in oil prices, which makes such a move pretty pointless.

By Charles Kennedy for Oilprice.com

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(edited)

This article accents the supply chain disruptions.

https://finance.yahoo.com/news/top-u-oil-rig-owner-220120884.html

Top U.S. Oil-Rig Owner Tumbles on Profit-Squeezing Inflation

Bloomberg) -- Helmerich & Payne Inc. suffered its worst decline since early in the pandemic as the biggest U.S. oil-rig operator posted a steeper-than-expected loss and warned of ballooning costs amid worsening energy-industry inflation.

Helmerich announced capital spending will more than triple to $270 million in the fiscal year that began Oct. 1, far in excess of what analysts were anticipating. The company posted an adjusted quarterly loss of 62 cents per share that exceeded every estimate in a Bloomberg survey.

Investors punished the Oklahoma-based company on Thursday, slicing the share price by 16% for the worst one-day drop since March 2020. The fiscal 2022 capital budget “came in a lot higher than anticipated,” analysts at Tudor, Pickering, Holt & Co. wrote in a note to investors. Escalating demand for rigs isn’t translating into improved profitability, according to the note.

Helmerich’s warning follows similar commentary by America’s No. 2 provider of frack pumps, Liberty Oilfield Services Inc., which last month cited “serious” supply-chain issues that have boosted costs faster than they can be passed on to oil explorers.

Edited by Tom Nolan

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https://oilprice.com/Energy/Oil-Prices/Oil-Prices-Tank-On-Renewed-COVID-Panic.html

Oil Prices Tank On Renewed COVID Panic

By Tsvetana Paraskova - Nov 19, 2021, 9:00 AM CST

  • Austria announced on Friday it would impose a full lockdown starting on Monday
  • On Thursday, Germany’s 16 states agreed to introduce new COVID-19 restrictions
  • As of 9:09 a.m. EST on Friday, WTI Crude prices had slumped by 3.05% at $76.60

Oil prices plunged by 3% early on Friday as Europe contends with rising COVID cases and is returning lockdowns and other restrictions, which the market fears would weigh on economies and oil demand.

As of 9:09 a.m. EST on Friday, WTI Crude prices had slumped by 3.05% at $76.60, the lowest level since early October. Brent Crude had dipped below $80 a barrel, and traded down 2.72% at $79.17, also the lowest in more than a month.

Prices sank after Austria announced on Friday it would impose a full lockdown starting on Monday.

Germany, its neighbor to the north and the largest economy in Europe, faces a “dramatic” fourth wave, German Chancellor Angela Merkel said earlier this week. On Thursday, Germany’s 16 states agreed to introduce new restrictions depending on the hospitalization rate per 100,000 residents. If those rates exceed three people hospitalized with COVID per 100,000 inhabitants, free movement for leisure activities will be allowed only for those who are vaccinated or who have recovered from COVID. In Munich, the mayor scrapped the iconic Christmas market in the city, while a full lockdown in Germany is not entirely off the table. A full lockdown in Europe’s largest economy would slow the economic recovery.

In Ireland, the government also announced restrictions this week, with pubs and nightclubs under curfew to close by midnight and people asked to work from home whenever possible.

COVID cases are also on the rise in the United States, where the Upper Midwest has registered the biggest jump in cases in what doctors describe as an “unprecedented” situation.

Apart from fears of an economic and oil demand slowdown amid rising COVID cases in developed countries, the oil market continues to watch apprehensively the possibility of releases from strategic petroleum reserves not only from the United States but also from major consumers in Asia, including China, India, Japan, and South Korea. 

By Tsvetana Paraskova for Oilprice.com

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https://oilprice.com/Energy/Energy-General/Texas-Grid-Still-Vulnerable-To-Blackouts.html

Texas Grid Still Vulnerable To Blackouts

By Irina Slav - Nov 19, 2021, 10:00 AM CST

The Texas grid remains vulnerable to blackouts in case of a repeat of this year's February Freeze, a report by the North American Electric Reliability Corp has warned.

According to the 2021-2022 Winter Reliability Assessment report, Texas risks a 37-percent reserve margin deficit in case of a harsh winter, NERC said.

A reserve margin is the reserve of power generation capacity comparative to demand. The expected reserve margin for Texas for this winter, according to NERC, is 41.9 percent. Yet if another cold spell hits the state, it would affect this spare capacity, pushing the margin deeply into negative territory.

This February, an Arctic cold wave washed over parts of the United States, freezing oil wells in the Permian and gas pipelines across Texas, causing a gas shortage at a time when wind capacity was at a low and leading to widespread blackouts and sky-high utility bills for some Texans.

Since then, regulators and utilities have been in a rush to make sure the crisis will not repeat even if cold weather descends on Texas again. Yet, according to NERC, this remains a possibility.

"Above-normal winter peak load and outage conditions could result in the need to employ operating mitigations (i.e., demand response, transfers, and short-term load interruption)," the regulator warned in its report.

"The electric grid will be able to perform significantly better this coming winter than in the past," ERCOT, the Texas grid operator, said in its turn, as quoted by Reuters.

Texas is more vulnerable to adverse weather effects on its grid than other states because its grid is almost completely isolated, and imports in times of emergency are not really an option. But, as Reuters noted in a recent report on the issue, Texas also lacks a capacity market where utilities are paid to be at the ready to supply power when needed.

By Irina Slav for Oilprice.com

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For those who don't know, Biden BLUFFED about the Vaccine Mandates with OSHA. 

This article gives tremendous insight to the OSHA regulations.

   "How Can OSHA Even Require Vaccines?"

https://ehsdailyadvisor.blr.com/2021/09/how-can-osha-even-require-vaccines/

https://archive.is/FR6EP

 

https://oilprice.com/Energy/Energy-General/Bidens-Bluff-And-Covid-Cases-Drag-Oil-Prices-Down.html

Biden's Bluff And Covid Cases Drag Oil Prices Down

By Michael Kern - Nov 19, 2021, 2:00 PM CST

  • Oil prices have continued to fall this week, driven largely by growing demand destruction fears due to new covid cases in Europe
  • While President Biden is yet to tap the SPR, rumors that he was considering it and asking fellow importers to do the same added to bearish sentiment
  • In the meantime, OPEC+ has continued to over comply to its crude oil production targets

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https://oilprice.com/Energy/Crude-Oil/Big-Oil-Is-Finally-Exercising-Restraint-And-Biden-Is-Pissed.html

Big Oil Is Finally Exercising Restraint, And Biden Is Pissed

By Haley Zaremba - Nov 20, 2021, 4:00 PM CST

  • Gasoline prices are rising to their highest levels in years, and Biden is facing increasing pressure to find a fall man.
  • Biden has already taken aim at OPEC+ and Russia, but now he’s looking in his own backyard.
  • This week, Biden asked federal regulators to open an investigation into the U.S. oil and gas industry to determine if it’s engaging in “illegal conduct”.

This week, the Najah’s Desert Oasis gas station in southeastern California put up a sign of the times. It read: $6.39 for regular. This remote gas pump isn’t your average fuelling station, to be sure, and even at the best of times, it has the highest gas prices in the country. But breaking the $6 mark is a monumental occasion, even for Najah’s. In California as a whole, the average gas prices are a painful and record-breaking $4.68 per gallon, and the nationwide average for a gallon of regular gasoline is now $3.41 -- a whopping $1.29 more than just a year ago. Indeed, inflation rates across the country are at a 31-year high, and Americans are really feeling the squeeze, and many are casting about who to blame for the hardship.

Although global demand for electricity has bounced back to pre-pandemic levels, global oil production has not -- not by a long shot. In the United States, oil production remains 12% lower than in February 2020, right before the impact of the pandemic ripped through oil markets. That’s the equivalent of pulling the U.S.’s entire production in the Gulf of Mexico out of the global economy. And oil and gas production levels have remained low even as the world suffers from an extreme energy crunch and skyrocketing fuel prices. 

And whose fault is it? Depending on who you ask, the answer is either Vladmir Putin and a geopolitical power play on the part of Russia, Joe Biden and his dastardly plan to do away with fossil fuels and suck U.S. coffers dry in the process, or OPEC+ and their stingy refusal to respond to the energy crisis unfolding in Europe, Asia, and (to a lesser extent) the United States. Now, President Joe Biden is pointing the finger at another culprit: the conniving and greedy domestic oil and gas industry. This week the U.S. president asked federal regulators to open an investigation into the U.S. oil and gas industry to determine whether companies are engaging in "illegal conduct" by profiting off of consumers’ pain, citing "mounting evidence of anti-consumer behavior by oil and gas companies."

"The bottom line is this: gasoline prices at the pump remain high, even though oil and gas companies' costs are declining," President Biden wrote this week in a letter to FTC chair Lina Khan. "The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately." 

Indeed, the price of unfinished gasoline has declined more than 5% over the last month. Typically this decline would be reflected in prices at the pump, but instead, gas station sticker shock continues to intensify across the U.S. "This unexplained large gap between the price of unfinished gasoline and the average price of the pump is well-above the pre-pandemic average," Biden continued, adding that Big Oil is raking in "significant profits off higher energy prices."

Backing up President Biden’s claims, Bloomberg released a report this week that oil and gas explorers in the United States may point to politics as the reason that they are holding back on upping production to ease oil prices, but the real reason is much simpler: they are making money hand over fist. According to figures from Deloitte LLP, U.S. oil companies are making more money now than at any other point in the entire history of the nation’s shale revolution. “And this may just be the beginning,” Bloomberg Markets wrote. “Free cash flow, the key metric watched by investors, probably will increase by 38% next year, presuming oil prices remain elevated.”

The American Petroleum Institute has fired back at President Biden in the wake of his plea to the FTC, saying that the move is merely a “distraction from the fundamental shift that is taking place and the ill-advised government decisions that are exacerbating this challenging situation." A representative of API went on to criticize Biden’s allocation of his time and energy to fight with the domestic oil and gas industry and OPEC+, saying that his attentions would be better spent “encouraging the safe and responsible development of American-made oil and natural gas."

By Haley Zaremba for Oilprice.com

More Top Reads From Oilprice.com:

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45 minutes ago, Tom Nolan said:

https://oilprice.com/Energy/Crude-Oil/Big-Oil-Is-Finally-Exercising-Restraint-And-Biden-Is-Pissed.html

Big Oil Is Finally Exercising Restraint, And Biden Is Pissed

By Haley Zaremba - Nov 20, 2021, 4:00 PM CST

  • Gasoline prices are rising to their highest levels in years, and Biden is facing increasing pressure to find a fall man.
  • Biden has already taken aim at OPEC+ and Russia, but now he’s looking in his own backyard.
  • This week, Biden asked federal regulators to open an investigation into the U.S. oil and gas industry to determine if it’s engaging in “illegal conduct”.

This week, the Najah’s Desert Oasis gas station in southeastern California put up a sign of the times. It read: $6.39 for regular. This remote gas pump isn’t your average fuelling station, to be sure, and even at the best of times, it has the highest gas prices in the country. But breaking the $6 mark is a monumental occasion, even for Najah’s. In California as a whole, the average gas prices are a painful and record-breaking $4.68 per gallon, and the nationwide average for a gallon of regular gasoline is now $3.41 -- a whopping $1.29 more than just a year ago. Indeed, inflation rates across the country are at a 31-year high, and Americans are really feeling the squeeze, and many are casting about who to blame for the hardship.

Although global demand for electricity has bounced back to pre-pandemic levels, global oil production has not -- not by a long shot. In the United States, oil production remains 12% lower than in February 2020, right before the impact of the pandemic ripped through oil markets. That’s the equivalent of pulling the U.S.’s entire production in the Gulf of Mexico out of the global economy. And oil and gas production levels have remained low even as the world suffers from an extreme energy crunch and skyrocketing fuel prices. 

And whose fault is it? Depending on who you ask, the answer is either Vladmir Putin and a geopolitical power play on the part of Russia, Joe Biden and his dastardly plan to do away with fossil fuels and suck U.S. coffers dry in the process, or OPEC+ and their stingy refusal to respond to the energy crisis unfolding in Europe, Asia, and (to a lesser extent) the United States. Now, President Joe Biden is pointing the finger at another culprit: the conniving and greedy domestic oil and gas industry. This week the U.S. president asked federal regulators to open an investigation into the U.S. oil and gas industry to determine whether companies are engaging in "illegal conduct" by profiting off of consumers’ pain, citing "mounting evidence of anti-consumer behavior by oil and gas companies."

"The bottom line is this: gasoline prices at the pump remain high, even though oil and gas companies' costs are declining," President Biden wrote this week in a letter to FTC chair Lina Khan. "The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump. I believe you should do so immediately." 

Indeed, the price of unfinished gasoline has declined more than 5% over the last month. Typically this decline would be reflected in prices at the pump, but instead, gas station sticker shock continues to intensify across the U.S. "This unexplained large gap between the price of unfinished gasoline and the average price of the pump is well-above the pre-pandemic average," Biden continued, adding that Big Oil is raking in "significant profits off higher energy prices."

Backing up President Biden’s claims, Bloomberg released a report this week that oil and gas explorers in the United States may point to politics as the reason that they are holding back on upping production to ease oil prices, but the real reason is much simpler: they are making money hand over fist. According to figures from Deloitte LLP, U.S. oil companies are making more money now than at any other point in the entire history of the nation’s shale revolution. “And this may just be the beginning,” Bloomberg Markets wrote. “Free cash flow, the key metric watched by investors, probably will increase by 38% next year, presuming oil prices remain elevated.”

The American Petroleum Institute has fired back at President Biden in the wake of his plea to the FTC, saying that the move is merely a “distraction from the fundamental shift that is taking place and the ill-advised government decisions that are exacerbating this challenging situation." A representative of API went on to criticize Biden’s allocation of his time and energy to fight with the domestic oil and gas industry and OPEC+, saying that his attentions would be better spent “encouraging the safe and responsible development of American-made oil and natural gas."

By Haley Zaremba for Oilprice.com

More Top Reads From Oilprice.com:

So let’s talk about the real reason for higher gas prices. COVID slowed down the US economy including FF. So drilling rigs went from roughly 700 to 200. As the economy has improved, so has the number of rigs. Completions of wells has been rising as well. Remember those drilled but incomplete wells? They have out paced drilled wells by over 100 for months. The oil business is not a light switch you turn on and off. Supplies for drilling parts, piping, etc also have come and go supply shortages due to COVID. If you look at US data our drillers for the most part have kept up with demand. And as usual so has the disinformation campaign. Heck their talking Permian records soon for oil production. If I remember right the rig count is up to 465 for oil. It seems to be growing 15-20 rigs every month. So a ways off from 700 but a far cry from 200. See how data works? Zerohedge doesn’t work. Lol. Check for yourself. A new report every month at the EIA site. It’s called the Drilling Productivity Report. They got a nice spread sheet there. 

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https://oilprice.com/Energy/Crude-Oil/Biden-Asks-The-World-For-Help-Easing-The-Global-Energy-Crisis.html

Biden Asks The World For Help Easing The Global Energy Crisis

By Alex Kimani - Nov 21, 2021, 6:00 PM CST

  • Oil prices have fallen below a key psychological barrier on news that Biden is trying to persuade a number of countries to release crude from their Strategic Petroleum Reserves.
  • Biden's highly unusual move comes just months after he made another request to OPEC+ to boost production so as to tame the oil price rally, and was once again denied.
  • U.S. gas prices have surged 60% since the beginning of the year, with prices in California hitting all-time highs, pitting Democrats against the administration.

Oil prices have dipped to their lowest levels in six weeks, with both Brent and WTI dropping below the psychologically important $80 per barrel mark for the first time in weeks. Brent was quoted at $79.67/barrel in Friday's intraday session, with WTI trading at $77.65 as talk of several countries releasing crude from their strategic reserves continued to gain momentum. According to Reuters, the Biden administration has reached out to several countries, including China, India, South Korea, and Japan, urging them to synchronize the release of crude from their Strategic Petroleum Reserves (SPRs) in a bid to lower global energy prices.

On the opposite side of the spectrum, European gas prices have recovered from their intra-week lows as indications of Russian supply flows remained disappointingly low. 

According to the Financial Times, whereas Gazprom (OTCPK:OGZPY) started adding some gas to its largest storage sites in Germany and Austria last weekend, Russia has failed to book additional pipeline capacity, suggesting that any storage fill would come from existing flows.

"Russia has done what it said it was going to do, but in a very narrow way. What would get a bigger reaction from the market would be if Gazprom went back to auctioning short-term gas supplies, as they have done in previous years," Laurent Ruseckas at IHS Markit tells FT. 

Front-month UK National Balancing Point (NBP) gas rose by 1.89 pence (p) per therm w/w to USD 204.79p/therm on 15 November, a strong rebound from the settlement of 178.98p/therm on 10 November. Dutch Title Transfer Facility (TTF) gas rose by EUR 0.873 per megawatt hour (MWh), before surging above EUR 89/Mwh on 16 November in the wake of the temporary suspension of the regulatory approval process for the Nordstream 2 pipeline. 

Also worth noting: The price of EUA carbon allowances has been bolstered by the COP26 meeting, and in particular by the completion of the Paris Agreement's carbon trading framework. The front-month EUA contract rose by EUR 5.30/t w/w to an all-time high of EUR 65.93/t on 15 November.

While gas prices remain strong in other regions, US prices have continued to fall thanks to a relatively comfortable inventory position due to a warmer-than-usual start to the winter and, of course, the latest SPR developments. 

According to the American Gas Association (AGA), there were 96 heating degree days in the week to 13 November, 28 fewer than normal (i.e., warmer conditions than normal). The cumulative number of degree days since the start of October stands at 421, 134 fewer than normal and 27 fewer y/y.

Front-month Henry Hub gas prices declined USD 0.41 per million British thermal units (mmBtu) w/w to USD 5.017/mmBtu.

Coordinated SPR release

Biden's highly unusual move comes just months after he made another unusual request to OPEC+ to boost production so as to tame the oil price rally. Predictably, OPEC+ declined the offer and has stuck to its earlier routine to boost output by 400,000 bpd a month that it started in August until the rest of the 5.8 million bpd cut is phased out.

However, Biden's SPR move is a different gambit altogether because, unlike OPEC+, which is clearly interested in maintaining high oil and gas prices, China and India have already begun releasing crude from their SPR's with a similar end-game to Biden's: Lower oil prices. 

China does not disclose the volumes of crude flowing into its strategic and commercial stockpiles. However, it's possible to work out an estimate by deducting the total amount of crude available from imports and domestic output from the amount of crude processed.

Related: Brits Google ‘Energy Bill Help’ As Energy Suppliers Go Bankrupt

Calculations based on this method reveal that China drew ~589,000 bpd from its SPR in May; 980,000 bpd in June, and ~223,700 barrels per day in July. HFI Research estimates that China's SPR capacity sits at between 840 to 1,260 million bbl, with current reserve levels closer to the lower end of that range.

Meanwhile, crude imports for the first eight months of 2021 clocked in at 10.4 million bpd, down 5.7% from the same period last year.

Back in June, Beijing announced huge cutbacks in import quotas for the country's private oil refiners. According to Reuters, China's independent refiners were awarded a combined 35.24 million tons in crude oil import quotas in the second batch of quotas this year, a 35% reduction from 53.88 million tons for a similar tranche a year ago.

The story is pretty much the same in India.

India announced in August that its SPR will be more active, although its relatively small size compared to China's makes its impact more muted.

India has started selling oil from its SPR to state-run refiners as part of efforts to commercialize the storage. Reuters reported 5.5 million barrels are in the process of being sold, while Indian newspaper Mint reported on Sept. 12 that a total of 4.3 million barrels would be sold to two refiners by December.

These are relatively low volumes, representing little more than one's day demand for India.

Done on an independent basis, SPR releases from either the U.S., China, or India might not do much to unsettle the global oil markets. A coordinated release by 4 or 5 of the biggest SPRs is, however,  a different story.

Immediate Relief

President Biden has faced calls for action from various parts of the Democratic Party,

including the Senate Majority Leader Chuck Schumer, who on 14 November demanded "immediate relief at the gas pump". U.S. gas prices have surged 60% since the beginning of the year, with prices in California hitting all-time highs.

Related: Our Renewable Future Will Run On Copper

However, the key advisors in the White House currently appear to be split along the lines of their main area of expertise.

The economic and political advisors to the president (who are generally in favor of early action against gasoline prices) point to falling presidential approval ratings and worrying inflation readings. Energy advisors to the president (who are generally more willing to wait) point to the gasoline price forecasts in the Energy Information Administration's (EIA's) Short Term Energy Outlook; the EIA expects gasoline to average USD 3.16 per gallon (gal) in December, down from the current national average of $3.41per gallon, and between USD 2.99-3.02/gal in each of the first six months of 2022.

According to Standard Chartered analysts, the best result for the administration would be that the market stays in the current holding pattern for an extended period. A sharp oil price rally above USD 85/bbl would likely force a release of reserves, but the more that time goes by, the more we expect fundamentals to become more comfortable, and the less credible the calls for a rapid rally well beyond USD 100/bbl are likely to become.

The analysts say that calls for a release have led to a situation whereby a significant amount of money is on the side-lines of the market looking to buy the dips after any actual release. While many traders doubt the credibility or the effectiveness of an SPR release, few would wish to be caught in an exposed long position at the time a release happened, and keeping that money out of the market has taken the momentum out of the price rally. The threat of a release has already gained the US administration at least two weeks of extra time. 

Losing some credibility among oil traders by not releasing quickly seems a relatively minor cost in terms of the time gained and the underlying weakening of market fundamentals and the associated dispersal of the market-tightness fear factor.

By Alex Kimani for Oilprice.com

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footeab@yahoo.com

On 11/16/2021 at 2:47 PM, Tom Nolan said:

Chart of the Week

Energy Mix

Are we supposed to LAUGH?  Or Cry at this chart?  Yup, put together by politicians and bankers...

"Other renewables" is supposedly going to double... In what delusional world will hydro double?  There are no other "renewables" to hit so this must mean hydro....  last I checked vast majority of hydro has already been done with only a few rivers going towards India not being completed.  I suppose you could say Peru/Bolivia.  The African rivers have gargantuan problems, but even if all of them were dammed up, it still would not come close to what has already been dammed up. 

These genius's think Poland/Russia/China/India will stop using coal?  HAHAHAHAHAHAHAHAHAHA  Meet the great white north, and meet Billions of people who need power. 

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https://oilprice.com/Energy/Oil-Prices/President-Bidens-Nuclear-Option-Against-OPEC.html

President Biden’s Nuclear Option Against OPEC+

By Irina Slav - Nov 22, 2021, 7:00 PM CST

  • The so-called No Oil Producing and Exporting Cartels Act, would give the U.S. Department of Justice the powers to sue OPEC members for manipulating oil prices and controlling production
  • The NOPEC bill has popped up in Congress more than once, but so far, it has had little chance of becoming law
  • Former White House official McNally: "We call it a nuclear weapon with a huge and uncertain impact,"

It began amicably, with a request from President Biden to OPEC countries to consider boosting their crude oil production because U.S. retail fuel prices were rising fast. Things escalated quickly, with the request becoming a demand and later a veiled threat that unless OPEC did what the White House wanted it to do, there would be consequences. 

Enter NOPEC.

The so-called No Oil Producing and Exporting Cartels Act, if it ever becomes a law, would give the U.S. Department of Justice the powers to sue OPEC members for manipulating oil prices and controlling production. It would rely on an amendment of the Sherman Antitrust Act that was used in the late 19th century to break up Standard Oil. It would also be a very risky undertaking.

"We call it a nuclear weapon with a huge and uncertain impact," Bob McNally, president of Rapidan Energy Group and a former White House official, told Bloomberg. "The remedies in the NOPEC act range from a slap on your wrist to seize all your assets." They would also be directed against sovereign states.

"NOPEC would not involve garden variety trust busting, but rather, legal action against instrumentalities of powerful sovereign countries for which control over oil production is an existential economic priority and in some cases, underpins the survival of ruling families," wrote two researchers from the Rice University's Baker Institute for Public Policy three years ago when NOPEC was again on the table as Washington grew annoyed with OPEC.

"If such a bill were passed and signed, it could weaken Washington's ability to effectively project extraterritorial legal power, much of which rests on the implicit threat of coercive action rather than the actual implementation of sanctions," Gabriel Collins and Jim Krane also noted. In other words, NOPEC will not win the U.S. any friends overseas.

The American Petroleum Institute is firmly against such legislation, and so is the Chamber of Commerce. No wonder, since retaliatory action, according to the Baker Institute researchers, could include foreign investors exiting the U.S. or avoiding it in future investment plans and even avoiding the U.S. dollar in transactions and the U.S. financial system as a whole. Things could even go further, with the potential defendants in antitrust cases retaliating against U.S. businesses with operations in their jurisdictions. A nuclear weapon indeed, complete with fallout.

The NOPEC bill has popped up in Congress more than once, but so far, it has had little chance of becoming law. The chances are still slim although the bill has bipartisan support and, as Bloomberg's Ari Natter noted in a recent report, President Biden co-sponsored one of the past versions of the NOPEC bill in 2007. This means that, unlike past presidents, he might look favorably on using this "nuclear weapon."

He might not have to, however, as tension around prices declines along with them. Crude has come down from $80 per barrel amid reports that China was preparing to release oil from its strategic reserves and that Japan, initially opposed to President Biden's idea of a concerted reserve release, was also preparing to do it.

OPEC, in the meantime, is calling for calm. The UAE's oil minister Suhail al-Mazrouei told CNBC last week that "I would encourage people to calm, trust us," adding that supply will grow further next year, leading to a buildup in inventories.

OPEC secretary-general Mohammed Barkindo also commented that the global supply of crude is on the rise, and there are already signs of a surplus, Reuters reported last week.

"The surplus is already beginning in December," Barkindo said, adding, "These are signals that we have to be very, very careful," when OPEC and its partners led by Russia meet next month for their regular review of production policy.

Analysts, such as RBC Capital Markets' Helima Croft, have noted that OPEC has been having trouble boosting its total production by as much as it had agreed originally due to some members' problems with investments and maintenance. This could become a serious issue in the first quarter of the year, Croft told CNBC, especially if it turns out to be cold and demand spikes.

In 2018, President Trump's antitrust chief Makan Delrahim told Congress that the NOPEC act, which Trump supported before he became president, would ultimately lower oil product prices for consumers. This might well be the case: OPEC's usual approach to retaliation is turning the taps on with full force.

As Kevin Book, managing director of research firm ClearView Energy Partners, told Bloomberg, "The result might be a flood" of oil. "It will crater the price of oil here."

While cheap gasoline is what Washington seems to be fighting for, the total price the U.S. could end up paying for it, as sketched by the Baker Institute researchers, might turn out to be prohibitive, with any alternative a better choice.

By Irina Slav for Oilprice.com

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https://oilprice.com/Energy/Energy-General/OPEC-Vows-To-Respond-If-Countries-Tap-Their-Oil-Reserves.html

OPEC+ Vows To Respond If Countries Tap Their Oil Reserves

By Julianne Geiger - Nov 22, 2021, 4:00 PM CST

  • OPEC+ has issued a grave warning to countries that look to release crude oil from their strategic reserves
  • OPEC delegates: releasing millions of barrels from major oil consumers’ SPRs is not supported by market conditions

OPEC+ has issued a grave warning to Japan, the United States, China, India, and South Korea: unleash millions of barrels of oil from your emergency stockpiles, and we are likely to respond.

That response, although OPEC+ failed to mention specific figures, would likely be changing their plans to ramp up production more slowly to compensate for the extra barrels released. 

History has shown that OPEC+ members are willing to do whatever it takes to maintain their market share and keep prices within an ideal range. In 2020, right before the pandemic, Russia and Saudi Arabia engaged in a tit for tat involving oil production and exports—switching to a pump at will policy that flooded the market with oil because the two oil titans couldn’t agree on a strategy.

The result was devastating for the markets, which shortly thereafter had to grapple with severe oil demand destruction courtesy of the pandemic.

So it’s not far-fetched to imagine that this latest threat—aimed mostly at the United States, which is largely behind what most expect would be a coordinated release of oil barrels from several counties’ SPRs—is not an idle one.

OPEC+ delegates, according to Bloomberg, said this week that releasing millions of barrels from major oil consumers’ SPRs is not supported by market conditions.

OPEC+ has been saying for over a month that the market will soon swing into a surplus, cautioning global oil markets against being too hasty and aggressive when it comes to ramping up production.

But immense pressure is building up on consuming nations over high gasoline prices—particularly in the United States, where gasoline prices often directly correlate to voter support for the current administration.

These high gasoline prices have been a sore spot for the Biden Administration, which has been caught between pressure for green initiatives and pressure to take steps that would lower gasoline prices.

OPEC+ will meet next week to discuss their production plans for the following month. OPEC+ now says that the group may reconsider its plans to add additional production.

By Julianne Geiger for Oilprice.com

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https://oilprice.com/Latest-Energy-News/World-News/Asian-Buyers-Cant-Get-Enough-Of-US-Sweet-Crude-Oil.html

Asian Buyers Can't Get Enough Of U.S. Sweet Crude Oil

By Charles Kennedy - Nov 19, 2021, 1:30 PM CST

Sweet crude grades from the U.S. Gulf Coast have seen increased interest from Asian buyers in recent weeks, as many refiners in the world’s largest oil-importing region are purchasing more of the sweeter crude varieties, energy analytics firm Vortexa says.

Asian refiners are looking for more crude of the sweeter variety as high energy costs are making sour crude processing more expensive. The high cost of hydrogen, which is used to remove the sulfur from the sour grades in diesel hydrocrackers, has risen in recent months amid the natural gas crunch in Europe and Asia.

So, Asia is now expected to see a sharp increase in sweet crude shipments in November, Vortexa said in an analysis this week.

Asia is set to receive 3.7 million barrels per day (bpd) of sweet crude this month, up from 3.1 million bpd in October. This would also reverse the declining trend of sweet crude intake in September and October, according to Vortexa. Chinese imports of sweet crude are expected at 1.6 million bpd in November, the highest in seven months.

The U.S. Gulf Coast is well-positioned to fill the gap of sweet crudes from West Africa, where Nigeria and Angola are struggling to boost crude oil production and exports, Vortexa said.

According to secondary sources in OPEC’s latest Monthly Oil Market Report (MOMR), Nigeria, Gabon, and Equatorial Guinea saw their output decline last month. The steepest drop was in Nigeria, whose production fell by 45,000 bpd to 1.354 million bpd. Nigeria’s output was more than 200,000 bpd below its cap of 1.6 million bpd. The country has been struggling to reach its quota, while frequent force majeure events have also contributed to the much lower production than allowed under the OPEC+ deal.

“This leaves the US Gulf Coast (PADD 3) as the next alternative supply source for Asian sweet crude buyers,” Vortexa said.

PADD3 shipments to Asia are estimated at around 1.1 million bpd departing in November, up from about 760,000 bpd for September-October.

“Should total US crude exports continue their upward trajectory, we could see even more flows to Asia in the coming weeks,” Vortexa noted.

By Charles Kennedy for Oilprice.com

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https://www.zerohedge.com/commodities/us-announces-coordinated-global-oil-release-50-million-barrels-expected

US Announces Coordinated, Global Oil Release Of Up To 50 Million Barrels, As Expected

Tyler Durden's Photo
by Tyler Durden
Tuesday, Nov 23, 2021 - 07:24 AM

As was widely leaked yesterday, moments ago the White House announced that it will release 50 million barrels of crude from its Strategic Petroleum Reserve in concert with China, Japan, India and South Korea, the White House said in a statement, an unprecedented, coordinated attempt by three of the world’s largest oil consumers to tame prices that could prompt a backlash by OPEC+.

The release, which as we noted will come in the form of an SPR Volume Exchange meaning "in the years ahead" the SPR will have to replenish the release almost certainly at much higher prices, will amount to 32 million barrels, and is in line with expectations of 30-35 million; as a reminder, 18 million has already been authorized by Congress and will be sped up.

The news of a coordinated release comes just hours after Bloomberg reported that India plans to sell about 5 million barrels of oil from its strategic petroleum stockpiles as part of a coordinated move with the U.S. and other allies to pressure prices. India’s crude will be sold to refiners including those operated by Mangalore Refinery and Petrochemicals Ltd. and Hindustan Petroleum Corp., which sent their stock price higher due to the implied arb. While the volume is the equivalent of less than half of India’s daily crude consumption, the release is symbolic as it shows oil consumers are willing to band together against OPEC’s rein over markets.

 

Here is the full White House Release:

President Biden Announces Release from the Strategic Petroleum Reserve As Part of Ongoing Efforts to Lower Prices and Address Lack of Supply Around the World

Announcement is in parallel with other major energy consuming nations, including China, India, Japan, Republic of Korea, and the United Kingdom

Over the last 18 months, the COVID-19 pandemic forced an unprecedented global economic shutdown. As the world is re-opening from a near economic standstill, countries across the globe are grappling with the challenges that arise as consumer demand for goods outpaces supply. But here in the United States, the economic recovery is stronger and faster than anywhere else in the world – according to the Organization for Economic Co-operation and Development, the US is the only one of the major economies to have returned to pre-pandemic gross domestic product levels – in large part due to President Biden’s American Rescue Plan, which funded and facilitated a nationwide vaccination program, provided resources to schools and small businesses to keep them open in the face of COVID waves and put money in the pockets of those hit hardest by the pandemic. As a result of the strong recovery in the United States, Americans have nearly $100 more per month in disposable income in their pockets this year, even as COVID has continued to complicate the economic recovery around the world.

Even so, American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills, and American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic. That’s why President Biden is using every tool available to him to work to lower prices and address the lack of supply.

Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.

The President has been working with countries across the world to address the lack of supply as the world exits the pandemic. And, as a result of President Biden’s leadership and our diplomatic efforts, this release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom. This culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices. Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent.

The U.S. Department of Energy will make available releases of 50 million barrels from the Strategic Petroleum Reserve in two ways:

  • 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the Strategic Petroleum Reserve in the years ahead. The exchange is a tool matched to today’s specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the Strategic Petroleum Reserve over time to meet future needs.
  • 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized.

The President stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic.

Even as the President is helping to lead the world in addressing oil supply imbalances, he is also focused on how consolidation in the oil and gas sector may be resulting in anti-competitive practices that keep American consumers from benefitting when oil prices fall. There is mounting evidence that declines in oil prices are not translating into lower prices at the pump. Last week, the President asked the Federal Trade Commission to examine what is going on in oil and gas markets and to consider “whether illegal conduct is costing families at the pump.”

Today’s announcement reflects the President’s commitment to do everything in his power to bring down costs for the American people and continue our strong economic recovery. At the same time, the Administration remains committed to the President’s ambitious clean energy goals, as reflected in the historic Bipartisan Infrastructure Law signed last week and the House-passed Build Back Better Act that together represent the largest investment in combatting climate change in American history and is a critical step towards reaching a net-zero emissions economy by 2050 and reducing our dependence on foreign fossil fuels.

The irony here is that Joe is indeed doing "everything in his power to bring down costs", and yet while oil prices may dip for a few minutes after the news, it's all uphill from there as Biden is now out of price-cut catalysts, and the runway to $100+ oil in 2022 is now clear.

As Bloomberg notes, the decision to collectively discharge stockpiled crude after OPEC+ countries rebuffed calls to significantly boost production marks a diplomatic win for the U.S. and a challenge to the grip that Saudi Arabia, Russia and other OPEC+ producers have on the market. The question now is whether OPEC+, which will see the release as a direct assault on its tactics, will now reverse on its previous plan of gradually boosting output, especially since the price of oil is sliding on the news, if not for much longer.

In response to the news which was fully priced in (according to Goldman), oil dipped modestly with WTI and Brent Jan’22 futures kneejerking reaction lower, but the move was almost immediately pared. At last check, WTI traded around $75.30/bbl and Brent was at $79.11.

brent%2011.23.jpg?itok=qsvcDQex

The bigger problem for Biden is that all available price-cut catalysts have now been used, and the only way is up.

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(edited)

https://www.zerohedge.com/energy/rounding-error-oil-prices-surge-biden-spr-release-backfires

TWITTER IMAGES AND VIDEO in article

"Rounding Error" - Oil Prices Surge As Biden SPR Release Backfires

Tyler Durden's Photo
by Tyler Durden
Tuesday, Nov 23, 2021 - 08:17 AM

The much anticipated - and much poo-poo'd - release from global reserves (of 50 million barrels) was announced this morning as the Biden administration desperately tries to stop the freefall in its approval ratings.

bfmCF70.jpg?itok=sh5nqTyY

So they "did something" - but it's not working.

 

As @GreeKFire32 notes so succinctly: "this accomplishes nothing... we consume 20 million barrels a day!"So, it should not be any surprise that while the kneejerk reaction was a brief jolt lower, prices are now notably higher post-SPR headlines...

2021-11-23_5-01-47.jpg?itok=dHsYMilu

Is this peak policy panic?

Kyle Bass explains that higher prices are coming and "it’s this kind of childish thinking that will compromise US National Security and harm the poor and underserved."

Bass adds:

But it’s this kind of childish thinking that will compromise US National Security and harm the poor and underserved.

A coordinated SPR release is a quick shot of morphine for a major infection.

It fixes nothing and is evidence of a panic 😱 in DC.

Prepare for $100 now...

If anyone took the time to review US SPR data, the administration has been selling many millions of barrels each month for the last 90 days.

bfm7117_0.jpg?itok=CTaeJLIl

And for context, the globe consumes 100 million PER DAY.

A coordinated release of 50 million is nothing at all. Rounding error.

#panic

Who could have seen this coming? Well, us and Goldman for one: "A Biden SPR Release Is Now Fully Priced In And Will Send Oil Price Even Higher In 2022."

Finally, we note that gas prices at the pump are already likely to dip in the short-term as the supply chain lag from crude to wholesale to retail...

bfm74C1_0.jpg?itok=nDNW65fp

We can only imagine the back-patting and self-aggrandizement that this drop in gas prices will prompt (just don't be too quick to gloat).

Edited by Tom Nolan

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https://oilprice.com/Energy/Crude-Oil/Biden-Announces-50-Million-Barrels-SPR-Release-To-Lower-Oil-Prices.html

Biden Announces 50 Million Barrels SPR Release To Lower Oil Prices

By Tsvetana Paraskova - Nov 23, 2021, 7:45 AM CST

  • US President Joe Biden announced the release of 50 million barrels of crude oil from the Strategic Petroleum Reserve
  • Analysts: The SPR release has been priced in already
  • Other major consumers—including India, China, and Japan—have already signaled they would also release crude from their reserves

US President Joe Biden announced on Tuesday that the Department of Energy would release 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) in a bid to lower high gasoline prices in a coordinated effort with other major oil-consuming nations.

The U.S. Department of Energy will make available releases of 50 million barrels from the SPR, of which 32 million barrels will be in the form of an exchange over the next several months, releasing oil that must be returned to the Strategic Petroleum Reserve in the years ahead. Another 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized, the White House said on Tuesday.

The SPR release from the United States is being carried out in parallel with other major energy-consuming nations, including China, India, Japan, the Republic of Korea, and the United Kingdom.

“The President stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic,” the White House said.

“American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills, and American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic,” the U.S. Administration said.

Other major consumers—including India, China, and Japan—have already signaled they would also release crude from their reserves.

Yet, analysts expect the coordinated move to have only a temporary effect on international crude oil prices and say the market has likely already priced in the SPR releases.

At the same time, the OPEC+ group warned on Monday that it could respond to a coordinated release by potentially reconsidering plans to continue adding more production each month to meet demand.

OPEC+ is set to meet next week to decide the oil production policy for January. The coordinated pushback against the OPEC+ policies could prompt the group to lower or even pause its monthly addition of 400,000 bpd of oil production, ING strategists Warren Patterson and Wenyu Yao said on Tuesday.

“The prospect of retaliation from OPEC+ does leave the potential for further volatility in oil markets,” they added.     

By Tsvetana Paraskova for Oilprice.com

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https://oilprice.com/Energy/Oil-Prices/Oil-Prices-Rally-After-US-Announces-Strategic-Reserve-Release.html

Oil Prices Rally After U.S. Announces Strategic Reserve Release

By Tsvetana Paraskova - Nov 23, 2021, 8:42 AM CST

  • Oil prices erased losses and jumped on Tuesday morning following the SPR release announcement
  • Despite the seemingly big number, 50 million barrels, the U.S. release actually equals around two and a half days of American petroleum consumption
  • Other countries are said to go for much smaller releases

Oil prices erased losses and jumped on Tuesday morning following the announcement from the U.S. Administration that it would make available 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to lower said oil prices.  

As of 9:27 a.m. EST, WTI Crude prices were back above $77, having erased earlier losses and trading up by 1.30% at $77.75. Brent Crude prices returned to the $80 mark, and were approaching $81, as they had risen by 1.73% to $80.96.

The headline for the oil market on Tuesday morning was the announcement of US President Joe Biden that the Department of Energy would release 50 million barrels of oil from the SPR in a bid to lower high gasoline prices in a coordinated effort with other major oil-consuming nations. The SPR release from the United States is being carried out in parallel with other major energy-consuming nations, including China, India, Japan, the Republic of Korea, and the United Kingdom.

Despite the seemingly big number, 50 million barrels, the U.S. release actually equals around two and a half days of American petroleum consumption, which was at 20.5 million barrels per day (bpd) in the pre-pandemic 2019.

The other countries are going for much smaller releases, and the message seems to be that major oil consumers are coordinating efforts to try to lower high prices, while OPEC+ sticks to its guns over its oil production plan.  

The oil market, however, has largely priced in SPR releases, as last week’s slide in prices showed. Analysts also point out that one-off sales from strategic reserves cannot do much to move oil prices significantly lower.   Related: Biden Announces 50 Million Barrels SPR Release To Lower Oil Prices

“We think Strategic Petroleum Reserves are not a sustainable source of supply and the effect of such market intervention would only be temporary,” Barclays’s analysts wrote in a note before the release, as carried by Reuters.

Last week, Goldman Sachs said that the market had already priced in a concerted release of crude from national reserves.

“There is a growing risk that OPEC+ responds to an SPR release by pausing planned supply increases,” ING strategists Warren Patterson and Wenyu Yao said on Tuesday before the U.S. announcement of the SPR release.

“The prospect of retaliation from OPEC+ does leave the potential for further volatility in oil markets,” ING said.

By Tsvetana Paraskova For Oilprice.com

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https://oilprice.com/Energy/Crude-Oil/Biden-Administration-Considers-Ban-On-US-Oil-Exports.html

Biden Administration Considers Ban On U.S. Oil Exports

By Charles Kennedy - Nov 23, 2021, 10:00 AM CST

A potential ban on crude oil exports is under consideration at the White House, a Democratic Congressman told Bloomberg, adding that “The economics of it makes sense.”

Rep. Ro Khanna, chair of the environmental sub-panel of the House Oversight and Reform Committee, disagrees with analysts who have been warning that a ban on U.S. oil exports could backfire, ending up in higher prices at the pump.

“Limiting U.S. crude to the domestic market means fewer potential buyers, and less demand, for that crude,” wrote Kyle Isakower, senior VP of the American Council for Capital Formation, for The Hill in a succinct explanation of the backfiring.

“That would likely be followed by a corresponding drop in American production. Since crude oil is traded globally, reduced U.S. production — regardless of where it is ultimately refined into fuels – lowers the global crude supply. Less supply on global markets puts upward pressure on price — not downward. Therefore, banning crude exports is more likely to raise prices than to lower them.”

In other words, a ban on U.S. oil exports would only push prices higher. Of course, proponents of the idea would argue that the ban will not be the only measure to bring prices down. The White House announced today a release of crude oil from the strategic petroleum reserve in the amount of 50 million barrels over the course of a few months, according to an unnamed source quoted by Bloomberg.

However, Khanna and several other Democratic lawmakers are certain that a ban on oil exports would have the desired effect. A group of nine House Democrats yesterday wrote a letter to the White House urging the president to ban oil exports and release oil from the SPR.

To warnings that a ban on oil exports would hurt the U.S. oil industry and trap oil that refineries cannot process on its own, Khanna said that refineries could be reconfigured.

By Charles Kennedy for Oilprice.com

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https://oilprice.com/Energy/Crude-Oil/SPR-Release-Only-Triggered-A-Brief-Selloff-In-Crude-Oil.html

SPR Release Only Triggered A Brief Selloff In Crude Oil

By Irina Slav - Nov 23, 2021, 12:00 PM CST

  • President Joe Biden has been scrambling to put a lid on runaway oil prices over the past month.
  • Biden’s latest plan is a joint strategic oil reserve release, cooperating with the likes of China, India, and Japan. 
  • OPEC+ has drawn a line in the sand, saying that if there is an orchestrated attempt to release strategic reserves, it will tighten supply.

Media reports about the joint release of millions of barrels of oil by the United States, China, and Japan prompted a selloff across oil futures contracts and a decline in benchmarks over the last week. However, the trend reversed this week when OPEC+ suggested that it might tighten supply in response to the release.

The reserve release idea came from the White House, which has been scrambling to find a way to rein in retail fuel prices amid rising inflation. According to the reports, President Biden approached the governments of China, India, Japan, and South Korea with the suggestion they release oil from their strategic reserves jointly in a signal to OPEC that large consumers can also move prices, just like large producers.

Initially, the prospects of the concerted release of oil were dim, but then China announced it was preparing for a new oil tender that would offer crude from its strategic reserve. Then Japan said it had found a way to release crude from its strategic reserve legally.

The country had an issue with the legality of such a move as law states oil from the strategic reserve could only be released in times of shortage or in case of a natural disaster, neither of which applies now. However, according to a Bloomberg report from earlier today, a draw from the reserve was legal if it was made from surplus supply.

Initially, India was against the move, saying it would not have the desired effect, but according to the latest update on the topic from Bloomberg, which cited unnamed sources, the government in New Delhi was discussing the timing of the reserve release and the coordination with other large consumers.

The U.S. itself announced a release from the Strategic Petroleum Reserve today. And it was a substantial release at 50 million barrels released over several months, according to a White House press release.

Even “a 35-million barrel release from the U.S. would be significant,” according to Warren Patterson, head of commodities strategy at ING Groep. “Once you consider potential volumes from others, we are looking at something pretty substantial. The risk of further Covid related restrictions this winter and potential SPR releases might be enough to persuade OPEC+ to pause supply increases.”

While large oil consumers confronted OPEC with reserve releases, hedge funds went on a selling spree, according to Reuters’ John Kemp. Funds sold 34 million barrels of West Texas Intermediate and 18 million barrels of Brent crude last week, out of a total 57 million barrels sold across the six most traded crude and oil product contracts.

As a result of this selloff, oil prices have been on the decline lately, especially as concern about demand in some parts of the world such as Europe has been rekindled by the latest flare-ups of Covid infections even in countries with a high vaccination rate such as Denmark. This, in turn, has added weight to OPEC’s argument about the uncertainty of demand in the coming months and the suggestion that it might need to reconsider its decision to add 400,000 bpd to its combined monthly production. This, done in response to the collective reserve release of crude, will likely push oil prices even higher despite the demand concerns.

“The battle lines are being drawn,” said John Kilduff, founding partner at Again Capital, as quoted by Bloomberg.  “Certainly, OPEC and the Saudis can win this in that they are holding all the cards. They can keep more oil off the market than a SPR release can put on the market. If you see WTI get under $70, then I would expect a response from OPEC+.”

By Irina Slav for Oilprice.com

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Michael Sanches

On 11/19/2021 at 8:45 AM, Tom Nolan said:

 

 

I thought the purpose of reserves was to have at least some supply during an embargo. To use this emergency supply for political reasons sounds like treason.

  • Upvote 1

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https://www.zerohedge.com/energy/pretty-please-us-trying-persuade-russia-lift-oil-output

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

Tyler Durden's Photo
by Tyler Durden
Thursday, Nov 25, 2021 - 11:50 AM

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.

putinandmbs.png?itok=tbxxpeV4

"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"...

"Political cycles in leading economies do not coincide with investment cycles, in particular in such an important industry as energy. What is the political cycle? [It is] four to five years. What are the leading political forces, parties and individual politicians doing at this time? They promise everything and as much as possible and at a cheaper price. In particular, this is related to green energy, Putin said.

"And what is the result? Banks stop lending, investments shrink. The moment will come when - similar to the current situation - the market demands [fuel], and [there] is simply nowhere to get from," he added.

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