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More blows to Biden administration. What will they do to keep prices down? Drain SPR completely?
Japan has begun purchasing oil from Russia at over $60 cap breaking with western allies and US directive.
Saudis and other OPEC members dropping production by 1.15 million barrels/day until end of year.
China is re-opening. A new mega-refinery in China has contracted for 8 million bbl of heavy crude.
Constrained supply from Venezuela and Ecuador plus the end of refinery maintenance in the US are pushing prices higher.
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It’s fascinating that futures prices peak in June of 2023. That’s as the demand from driving season heads towards a seasonal peak.
I don’t know where supply will be expanded in the near term as the SPR is off the table and industry capital projects are long lead items.
Accountability is a bitch…for the administration and for the Fed. Someone will be messing with our traditional measures of inflation. 😂🤦🏼♂️
Here's a toast with one last pour, may it last forever and a minute more;
Good fortune seems to you have sung, to live and love way past long -
So many pieces to the puzzle. Biden/Kerry are obsessed with climate. Then Ukraine. Then Taiwan. LGBT And MAGA always. That’s the agenda and it’s all bad.
As to supply, Venezuela? Mexico? Can’t do much more with Canada. Biden’s fist bump with Saudi Arabia didn’t work either.
The impact of China opening will be on the supply side. Commodities. And that means higher inflation no matter what the administration wants.
I’m watching the administration for cracks in internal support. But no one is leaving yet. Maybe they are all daft.
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*shrug* Just another opportunity to blame someone else for inflation. Like the Carter administration, the oil shock will happen *to* this administration. Devaluing the dollar and abandoning domestic production have nothing to do with it. Draining half the Strategic Petroleum Reserve was the right move at the time, who could have anticipated that it would leave the US without a cushion?
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Another observation in an effort to solicit feedback from those smarter than I. OPEC’s weekend policy shift is clearly inflationary. Yet today the 2 year bond yield declines by 9 basis points.
Bank balance sheets are perhaps more impaired than the administration is acknowledging? Is the Fed capitulating on the shrinking of the balance sheet? When will we be forced to pay the piper?
Here's a toast with one last pour, may it last forever and a minute more;
Good fortune seems to you have sung, to live and love way past long -
I am not particularly disturbed by the oil news in terms of impact the economy since energy and oil spending as % of GDP has dropped steadily over time. Yes, it is inflationary, but less leverage than in past decades. Also, higher pricing drives increased exploration and opens “marginal” production.
I definitely am disturbed by oil prices going up and benefitting certain authoritarian governments.
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I definitely am disturbed by oil prices going up and benefitting certain authoritarian governments.
Yes. Russia for one. And they have a lot of gold.
Right now I could use some gold to pay for my fuel oil and electric bills which have just about doubled.
I asked my wife if she’d buy me a barrel of light west Texas crude for my birthday.
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Trigger for Saudi oil production cut was the comment that the U.S. would not refill its strategic petroleum reserves this year, per MarketWatch.
— unusual_whales (@unusual_whales) April 4, 2023
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https://www.foreignaffairs.com/world/energy-insecurity-climate-change-geopolitics-resources
A good read energy security, policy and who the winners might be as we stumble towards carbon net zero in 2050.
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I suppose it’s not surprising that Foreign Affairs would speak positively about the role of global/national bureaucratic structures. That such structures would be core to their discussion of the energy market. That their focus would be on global “challenges” not national possibilities. That they would predicate their analysis on “climate science”.
However, if you look at Ukraine, global migration, fentanyl trafficking, Taiwan, Chinese exploitation of political bankruptcy in Africa, nuclear proliferation, bio weapons research, inflation, quantitative easing and failing financial regulatory schemes, might one conclude that a reliance on global bureaucracy might be I’ll conceived?
Here's a toast with one last pour, may it last forever and a minute more;
Good fortune seems to you have sung, to live and love way past long
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