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Do Oil Prices Have Lift-off Velocity? - Christopher Lewis gives the chart technicals

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Crude Oil Price Forecast – Crude Oil Markets Get Hammered

Published: Dec 20, 2021, 17:11 CST2min read

WTI Crude Oil

The West Texas Intermediate Crude Oil market has gapped lower rather significantly during the course of the open on Monday, and then just fell right out of bed. By doing so, it suggests that the market is going to continue to see downward pressure, and perhaps even break down below the $65 level. Keep in mind that the markets are starting to price out the idea of inflation, and oil is one of the first places you see that. This does not mean that you should chase this trade, especially at this time of the year. I will now be looking for exhaustion on short-term rallies that I can fade. That being said, if we break down to a fresh, new low, then I will simply follow the trend, but my preferred trade is to short rallies.


Brent markets also of course have done the same thing, slicing through the 200 day EMA and even the $70 level. At this point, I think the market will probably get a little bit of a bounce, but that bounce will almost certainly be sold into. At this point in time, I anticipate a lot of choppy and erratic trading, because we are at the end of the year. A lot of trading is going to be about closing positions for the year, so keep that in mind. Ultimately, this is a market that should be noisy, but I think you get an opportunity to sell it a few days down the road. If the $65 level gets broken to the downside, the bottom will fall out. Regardless, keep your position size reasonable, you can get into a lot of trouble this time a year.

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Oil Price Fundamental Daily Forecast – US Restrictions Would Sink Crude Oil Prices

Published: Dec 21, 2021, 12:49 CST2min read
The wildcard is whether the United States will cave to growing pressure to stem the spread of Omicron and announce some restrictions.
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are rebounding on Tuesday after falling to its lowest level since December 3 the previous session. The fast bounce-back suggests Monday’s sell-off may have been overdone and fueled by an overreaction to Omicron fears.

At 11:56 GMT, March WTI crude oil is trading $69.45, up $1.09 or +1.59% and March Brent crude is at $72.52, up $0.95 or +1.33%. On Monday, the United States Oil Fund (USO) settled at $49.89, down $0.89 or -1.75%.

Mysteriously, we’re seeing improved appetite for risk, however, investors remain cautious due to the unknown impact of the Omicron coronavirus variant on the global economic recovery. Most traders are chalking up the short-covering rally to position-squaring ahead of the Christmas and New Year’s holiday season.

Some are saying the COVID wall of worry has been priced in. If this is the case then we’re likely to see a choppy, rangebound trade over the near-term.

Europe Considers New Curbs as Omicron Sweeps World

While the United States appears to be willing to take a “wait and see” approach to Omicron, countries across Europe are taking a more aggressive approach that suggests there will be a loss of demand in the region.

According to Reuters, some European countries are considering new curbs on movement on Tuesday as the fast-moving Omicron variant swept the world days before Christmas, throwing travel plans into chaos and unnerving financial markets.

South Korea, the Netherlands, Germany and Ireland are among countries to reimpose partial or full lockdowns, or other social distancing measures. Thailand will reinstate mandatory quarantine for foreign visitors from Tuesday.

Britain, Germany and Portugal were considering further measures. U.K. Prime Minister Boris Johnson said on Monday he was looking at all kinds of measures to keep Omicron under control.

Daily Forecast

It seems like everyone is doing it – imposing restrictions – so why not the United States. Countries that can ill afford another blow to their economies are curtailing economic activity. There is no doubt that oil demand will take a hit. In my opinion, traders are pricing in lower global demand, ex-United States.

Therefore, the wildcard is whether the United States will cave to growing pressure to stem the spread of Omicron and announce some restrictions. I don’t think this has been priced in. If the U.S. imposes restrictions then we could see March WTI at $62.05 – $60.00 rather quickly.

In other news, U.S. crude oil inventories are expected to have fallen for a fourth consecutive week, while distillate and gasoline stockpiles likely rose last week, a preliminary Reuters poll showed on Monday. At 21:30 GMT, the American Petroleum Institute (API) will release its latest figures.

For a look at all of today’s economic events, check out our economic calendar.

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...John Kerry for waging a crusade against the oil and gas industry. According to the article, Kerry had on the quiet pressured banks into shrinking their business with oil and gas, which had raised concern in some government circles...

Is The White House Really Ready To Support U.S. Oil?

By Irina Slav - Dec 20, 2021, 6:00 PM CST

  • Energy Secretary Jennifer Granholm claimed that the White House wanted to work with the U.S. oil industry on future-facing solutions 
  • In reality, it seems the Biden administration is doing its best to hinder funding for the industry in an effort to accelerate the energy transition 
  • A recent opinion piece for the Wall Street Journal claimed that Biden’s special climate envoy John Kerry has been pressuring banks to do less business with the oil industry

Earlier this month, Energy Secretary Jennifer Granholm told the U.S. oil industry that she wanted to work together on "future-facing solutions" and asked oil companies to "take advantage of the leases that you have, hire workers, get your rig count up."

It was a heartfelt message seeking collaboration between the federal government and the oil industry, an industry that the government has signaled it will definitely not work with but rather work against. And, indeed, it has.

The moratorium on new federal land leases was the start. The moratorium was challenged in court and eventually lifted, but it wasn't the only move of the administration against oil and gas. Keystone XL was killed after President Biden came into office, and although there are differences of opinion as to how necessary the pipeline was, the fact that the administration did not have the industry's best interests at heart was obvious enough.

It is perfectly understandable, really. President Biden came into office with an energy transition agenda. He campaigned for a shift to lower-carbon energy systems, which necessitates less oil and gas drilling. Only since Biden came into office has it become painfully clear the shift will not happen overnight, and we will continue to need fossil fuels for quite a while yet. But members of the administration are working to speed this process up.

In an opinion piece for the Wall Street Journal this month, investor and Heritage Foundation fellow Andy Puzder struck at President Biden's special climate envoy John Kerry for waging a crusade against the oil and gas industry. According to the article, Kerry had on the quiet pressured banks into shrinking their business with oil and gas, which had raised concern in some government circles.

For instance, in May this year, a group of 15 state treasurers—not all from oil states, either—wrote to Kerry expressing their concern with his pressure campaign against oil and gas. According to the letter, the pressure campaign was private, and it involved other members of the Biden Administration, too.

"As members of the Senate Banking Committee have noted," the letter said, "these efforts to secure extralegal commitments from financial institutions will discriminate against law-abiding U.S. energy companies and their employees, impede economic growth, and drive up consumer costs."

That wasn't the first letter on this topic, either. A month earlier, a group of Republican Senators led by Louisiana's John Kennedy, who is a member of the Senate Banking Committee, wrote to Kerry expressing the same sentiment as the state treasurers a month later.

"As marginal funding costs rise, energy companies will have two choices: raise the cost of their products or cut expenses, including by laying off employees," the legislators wrote. "Eventually, they may be forced to do both. Unsurprisingly, these effects are likely to be borne by working class Americans. . . . Perhaps most disconcertingly, this self-harm will diminish America's strategic advantage in fossil energy over adversaries but not meaningfully reduce global carbon emissions given that 90 percent of total emissions come from outside of U.S. borders, as you have recognized yourself."

They also referred to a scandal from the Obama era, likening Kerry's "crusade", as Puzder put it, to that scandal: "Beyond the poor track record associated with central economic planning, this apparent attempt to prevent energy companies from obtaining capital disturbingly resembles the Obama administration's notorious 'Operation Choke Point' scandal, in which financial regulators attempted to coerce banks into denying services to legal yet politically-disfavored businesses."

Now, the oil industry is already subject to growing pressure from investor groups that are specifically targeting banks in a bid to do what Kerry is doing—limiting the industry's access to funding. Just last week, Reuters reported that an investor group was calling on banks to scale back their financing of new oil and gas projects and making accusations that their emission commitments are not good enough.

There's regulatory pressure, too. Earlier this month, the Office of the Comptroller of the Currency proposed new guidance that would force banks to add climate risk assessment to all of their operations. This is the sort of indirect pressure that would also see less financing available for oil and gas companies.

Banks are yielding, too. It is difficult not to yield when you are being pressured from all sides, especially in the reputation department, which seems to have become about as important as bottom lines in the era of social networks. Citi recently said it would begin screening clients for climate commitments, and it may have to drop some. Others, such as Britain's NatWest, are already dropping "dirty" clients.

Of course, there will continue to be alternative sources of funding, although perhaps they won't be able to fully replace legacy banks if it ever comes to that. But over the long term, it looks less like a crusade and more like a war between reputation and bottom lines. Normally, the latter would win. In this day and age, it's hard to say.

By Irina Slav for

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