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"The Sky is Falling, The Sky is Falling" ____ Henny Penny, 1823. The Sky is NOT Falling. Despite OPEC Cuts, Libya, Sanctions, Tanker/Pipeline sabotage,with all that US Inventory up 29 million bbls, World inventory up 143 million bbls. So . . . . .

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The markets are starting to understand.  There is plenty of supply ! Demand is firm for now.

I don't understand the markets fixation on ONLY the US inventory.  Shale is but  8% of world daily production. OPEC "production cuts" does not necessarily mean "tight supply" as is reported. World inventory increase of 143 mm/bbls in the last 20 weeks is not tight supplies.

The OPEC cuts and Trump sanctions resulted in DISLOCATION, LOGISTICS problems andTANKER REROUTING. To get the required grade oil scheduled and delivered caused a little inconvienenceand delays.

What this tells us, in addition to US production increases there are other world increases that more than offset the OPEC Cuts, Sanctions, etc. We know Nigeria started offshore project + 200k bbls added, Libya restarted Sharara + 300k added. There are more.

If a Tanker ship was attacked near the Straights of Hormuz 15 years ago oil price would have gone up $20 in a day. No exaggeration.  Not today.

Can you believe the Saudi Tanker that was attacked was going to ship oil to the United States. Those Houthis in Yemen must have excellent intelligence. This might have been the first shipment to US since KSA cut off all shipments to US as part of production cuts.

The supposed "sabotage" has put a floor under oil.  Who wants to short oil with that wildcard out there, warranted or not.

When Saudi Oil Minister says, " . . . . do whatever necessary to balance oil markets." 

Does "whatever" mean whatever ? ? ? Like anything ?  I guess it's a matter of survival.

For those that do not understand Arabic the Saudi use of the word "balance" translates in English to " price fixing or extortion"

OPEC statements are very nuanced.  Be careful when they say supply, inventory, production, exports, etc.  They are not all the same. For the first 3 months of the OPEC agreement Saudis cut "production" but not exports. Now they say they are going to increase production for internal needs (yea, right LOL) . They are just reloading for exports second half of year.

To all the "Henny Pennys" out there relax.

 The world is not ending. The sky is not falling.

The shale industry is not going bust.

Their is plenty of investment to continue the supply despite what OPEC or IEA want you to believe.



Edited by Falcon

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