So oil touched $80! (WTI break $71 twice). What does the future hold?

Trump Hit Iran With Oil Sanctions. So Far, They’re Working.

https://www.nytimes.com/2018/09/19/business/energy-environment/iran-oil-sanctions.html

Comment: I wrote few weeks back that September will be a bearish month for oil prices (Here is the lin: https://oilprice.com/Energy/Energy-General/A-Bearish-September-For-Oil.html). However, the case seems to be quite the opposite. Even as Trump imposed another $200 bn of tariffs and then as China retaliated with $0 bn tariffs...the oil prices remained unfazed. 

What do you all the experts see here? I still think that the effect of trade war cannot be avoided. The Iranian sanctions, however, are driving up the oil prices very fast..with this pace can we see oil at $85 near or after November 4th?

@William Edwards, @Jan Erik, @Jan van Eck, @Tom Kirkman, @Dan Warnick-----Please help me out understand this.

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Let me check my crystal ball... Nope, all cloudy, tariffy, and sanctiony. Good luck finding firm ground!

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2 minutes ago, Marina Schwarz said:

Let me check my crystal ball... Nope, all cloudy, tariffy, and sanctiony. Good luck finding firm ground!

I tried to scry in my palantir as well....(it made me engage in a short sell position)....but bullish forces are trying to do harm! 

 

 

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1 hour ago, Tom Kirkman said:

My advice would be to ignore the Failing New York Times.

f102f668b5373ffa256ea74e601b67874e692620a4f23d50bbb9096eb7c054e8.jpeg

 

Try these Oil Price articles instead:

Just How Low Can Iran’s Oil Exports Go?

Why Oil Markets Can’t Escape OPEC, Russian Influence

Iran Sanctions Are Damaging The Dollar

Mr. Kirkman some very incisive articles!I wrote about how two factors, Iranian sanctions and trade war, will continue to guide prices for the rest of the year. I agree with the writer as 49% of Iran's oil exports go to China amd India. I think if EU can put further pressure...we might see waivers as well!? Do you think, what I have been thinking (in a hushed electromagnetic wave pattern) that Iranian sanctions, as we move near the date, might not have that much of an effect? Also, SPR's sale can tame down oil prices as well? SORRY FOR SO MANY QUESTIONS!

This Sunday...I believe, despite the report by Bloomberg that KSA is all hunky dory with oil above $80, the meeting will conclude with an assurance that they'll manage the shortfall by Iranian sanctions. 

 

And dollar's dominance in the longer run, especially as Trump is in the office, is seriosuly under threat! YES!

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Yeah, that's what they do... But not to worry, American refineries are going into maintenance season, inventories will rise and this should restrain prices' flight for a while at least. Some expect WTI to fall to $65 in a few weeks.

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Also, markets right now are ignoring the trade war and another round of $267bn of tariffs. Here is an interesting piece:

https://www.newyorker.com/news/our-columnists/dont-underestimate-the-danger-of-trumps-trade-war-with-china

 

Also read: Trump's trade advantage might be slipping day by day.

https://www.bloomberg.com/news/articles/2018-09-20/trump-s-early-trade-war-advantage-may-be-slipping-by-the-day

 

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5 minutes ago, Marina Schwarz said:

Yeah, that's what they do... But not to worry, American refineries are going into maintenance season, inventories will rise and this should restrain prices' flight for a while at least. Some expect WTI to fall to $65 in a few weeks.

Yes...I believe, albeit at the moment this might go against the prevailing sentiment, that chances of oil prices going down, from the current level, are more than moving up ...for reasons cited and discussed above. 

Sunday's OPEC meeting will be very interesting. Do you think they will be bold enough to repeat what a Bloomberg report few days back reveal--- that they are fine with $80 plus oil prices?

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Of course they are fine. No, pardon me, they are "comfortable". But we have yet to hear how fine (COMFORTABLE) China and India and the rest of the Asian importers are with this price level.

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7 minutes ago, Marina Schwarz said:

Of course they are fine. No, pardon me, they are "comfortable". But we have yet to hear how fine (COMFORTABLE) China and India and the rest of the Asian importers are with this price level.

Very well said. And I am also waitin for Trump's tweet saying "OPEC is at it again..."

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52 minutes ago, Marina Schwarz said:

But not to worry, American refineries are going into maintenance season, inventories will rise and this should restrain prices' flight for a while at least. Some expect WTI to fall to $65 in a few weeks.

Marina, I still don't think oil above $80 is sustainable.  Now that Oil is around $80, it seems fairly likely that oil prices may get pulled down again soon.  So far this year, oil seems to get knocked back down shortly after it climbs up to a psychological ceiling of $80.

I've commented ad nauseum about my preference for $65 oil, so we'll see what happens.

53 minutes ago, Osama said:

Mr. Kirkman some very incisive articles! I wrote about how two factors, Iranian sanctions and trade war, will continue to guide prices for the rest of the year. I agree with the writer as 49% of Iran's oil exports go to China amd India. I think if EU can put further pressure...we might see waivers as well!? Do you think, what I have been thinking (in a hushed electromagnetic wave pattern) that Iranian sanctions, as we move near the date, might not have that much of an effect? Also, SPR's sale can tame down oil prices as well? SORRY FOR SO MANY QUESTIONS!

This Sunday...I believe, despite the report by Bloomberg that KSA is all hunky dory with oil above $80, the meeting will conclude with an assurance that they'll manage the shortfall by Iranian sanctions. 

 

And dollar's dominance in the longer run, especially as Trump is in the office, is seriosuly under threat! YES!

Osama, that's quite a few questions.  I can only offer my own opinions; as always, you are free to disagree.

It appears that traders have already mostly taken into account a reduction of Iranian oil.  China for certain, and India most likely, will continue to buy Iranian oil despite impending sanctions, although probably at reduced amounts.

US sale of Strategic Oil Reserves has negligable impact on global oil supply or global oil prices.

I wouldn't worry too much about US dollar dominance.  Russia is trying to have a backup plan of selling oil & gas in EU rather than dollars, and China's long term plans for PetroYuan are inching ahead, at a slow pace like a molasses tsunami.

As I already mentioned above to Marina, now that oil has basically reached $80 this Autumn (which back in June I suggested might happen) lets see if it drops back down a bit.

For reference, some of my earlier comments and posts, relevant to your questions:

My hope for an average of $65 oil this year, posted back in May.

In June, my post about Oil Prices Heading Higher, Maybe $80-ish Before Autumn?

And one of my follow-up threads: Oil Prices Bookended for Rest of This Year? Maybe $50 to $80? (My old 'See Saw' theory redux)

One of my numerous threads on PetroYuan: China’s Oil Futures Contract Is Beginning to Show Its Teeth

I could go on, but you get the idea....

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I agree it's unsustainable but I'm wary of perhaps giving in to my wishful thinking. Wait, no. India does not like oil at $80. China does not like oil at $80. American drivers don't like oil at $80. Strike that wishful thinking remark.

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13 minutes ago, Marina Schwarz said:

I agree it's unsustainable but I'm wary of perhaps giving in to my wishful thinking. Wait, no. India does not like oil at $80. China does not like oil at $80. American drivers don't like oil at $80. Strike that wishful thinking remark.

Update:

 

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2 hours ago, Tom Kirkman said:

Marina, I still don't think oil above $80 is sustainable.  Now that Oil is around $80, it seems fairly likely that oil prices may get pulled down again soon.  So far this year, oil seems to get knocked back down shortly after it climbs up to a psychological ceiling of $80.

I've commented ad nauseum about my preference for $65 oil, so we'll see what happens.

Osama, that's quite a few questions.  I can only offer my own opinions; as always, you are free to disagree.

It appears that traders have already mostly taken into account a reduction of Iranian oil.  China for certain, and India most likely, will continue to buy Iranian oil despite impending sanctions, although probably at reduced amounts.

US sale of Strategic Oil Reserves has negligable impact on global oil supply or global oil prices.

I wouldn't worry too much about US dollar dominance.  Russia is trying to have a backup plan of selling oil & gas in EU rather than dollars, and China's long term plans for PetroYuan are inching ahead, at a slow pace like a molasses tsunami.

As I already mentioned above to Marina, now that oil has basically reached $80 this Autumn (which back in June I suggested might happen) lets see if it drops back down a bit.

For reference, some of my earlier comments and posts, relevant to your questions:

My hope for an average of $65 oil this year, posted back in May.

In June, my post about Oil Prices Heading Higher, Maybe $80-ish Before Autumn?

And one of my follow-up threads: Oil Prices Bookended for Rest of This Year? Maybe $50 to $80? (My old 'See Saw' theory redux)

One of my numerous threads on PetroYuan: China’s Oil Futures Contract Is Beginning to Show Its Teeth

I could go on, but you get the idea....

I agree with your opinion. 

 

I myself am waiting to see whether oil will drop from current levels (it might). Interesting times...

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Bull markets rise on worries.....

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This was an interesting piece:

Saudi Arabia seeks stable, not soaring, oil prices---http://www.arabnews.com/node/1376251/business-economy

 

As I write this post, KSA has intercepted a missile allegedly from Yemeni Houthis and today there was an unfortunate news of terrorist attack in Iran. As we enter the new week these geopolitical tensions might cause another rally however, the Sunday OPEC ministerial meeting might ease some concerns regarding future supply. 

Cc: @Tom Kirkman, @Marina Schwarz, @William Edwards, @Jan van Eck, @Jan Erik, @Dan Warnick 

 

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ah, the Green Truth, which is probably right in this case. I do wonder what the current estimate is for what prices are required to balance the KSA budget, I suspect it's more then $80.

Prior to WW1 the French theorized strategic bombing would win a war. It didn't in WW1, but they blamed that on inadequate bombers.

In WW2 bombing caused a lot of carnage, but troops on the ground, won the war.

In Vietnam more bombs were dropped than all of WW2, on a tiny country, and the US lost anyway. Of course the great LeMay line, "we'll bomb them back into the stone age" definitely doesn't work when they aren't industrialized.

Until KSA is willing to invade Yemen, the bombing campaign will continue to do little but hemorrhage cash, create a lot rubble and animosity, be a humanitarian mess, and except the odd missile aimed at Riyadh in reply. Even an invasion probably would be problematic. Taking territory is quite a bit easier than assimilating it as an ally.

And the in-Iran incident is sad. Somehow the cycle needs to stop. The old Ghandi line, "an eye for an eye, and eventually we are all blind" certainly seems to be playing out. 

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anyone have any ideas on this article?

 

https://www.wsj.com/amp/articles/opec-aims-for-oil-below-80-amid-disagreement-over-quotas-1537647024

 

also with china and us now cancelling talks and more tensions on sanctions will this legit start spooking commodities again? Ofcourse OPEC said earlier that low 70s to high 70s was the range they wanted since it let them invest but didnt cause demand destruction.

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2 hours ago, The Lancer said:

anyone have any ideas on this article?

 

https://www.wsj.com/amp/articles/opec-aims-for-oil-below-80-amid-disagreement-over-quotas-1537647024

 

also with china and us now cancelling talks and more tensions on sanctions will this legit start spooking commodities again? Ofcourse OPEC said earlier that low 70s to high 70s was the range they wanted since it let them invest but didnt cause demand destruction.

There have been rumors, I'd say, that this might happen. I guess we have to wait. However, many have pointed to the fact that this is a ministerial meeting wherein they don't discuss policy matters...cor that what is called an 'extraodinary' meeting is called and this is not one of them.

But I hope they will give a message of sorts....to alleviate the concerns vis a vis supply.

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On 9/20/2018 at 6:38 AM, Osama said:

I agree with your opinion. 

 

I myself am waiting to see whether oil will drop from current levels (it might). Interesting times...

Hi Osama 

new to this forum and I care about oil price as every driver and consumer does hahah, actually I need a way lower WTI price so I can get out my oil bearing ETF. Anyway, it’s great that you started this conversation and I respected all of your valuable thoughts, indeed.

lets see what is going to happen next few conning weeks. 

As the “greatest king of Trump” said: 

Cheers! 

DA2254AA-9F25-4978-82A5-53A924D69CD8.jpeg

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(edited)

hey ppls,

Seems that the meeting was more reassuring that I expected.

https://twitter.com/Amena__Bakr 

https://twitter.com/javierblas

What do you guys think? The interesting parts is 1mbpd is still the aim and will be possible soon. + another 500 early next year mabye. Then UAE and Saudi have spare capacity of almost 5mbpd or something. And UAE reports inventories up by 7m.

Also the mention of demand destruction being brought up at just 80$ is amazing news. This is the focus of price to demand. Assuming if prices go up to fast and stay high to long people will opt for more efficient stuff to lower demand permanently.

 

Edited by The Lancer

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