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United States Hydrocarbon Policies Are Off the Rails

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Mike

Good Monday Morning America


There is no truce between the US and Iran, no cease fire, no memorandum of understanding and the Strait of Horumuz is not open for business. The US likely spent a billion dollars hammering Iran this weekend, them us and the rest of the Middle East. Oil prices are up $2.50 per BO this morning. If this happened in March WTI would be $110. Oh wait, it did happen.


Inventories are dangerously low, nothing happening in the Permian Basin right now is going to show up in the market until December and there is 6-8 MM BOPD of worldwide production from the ME out of play at the moment. The costs to move oil around the world, including fuel and insurance, is astronomical.


The US has drained itself helping the world get thru this mess. If it's a world oil market, not a US oil market, as we have been…


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Mike
Mike
5 days ago

It seems to me that this administration is betting the entire ranch on U.S. tight oil production from the Permian Basin coming to the rescue...because we are plum OUT of oil lagniappe to be exporting to our friends and allies across the world for the sake of campaign promises. Not another 5 gallon bucket should be sold, or traded, out of the SPR; that's dumb.

Oil Inventory Levels — US Crude, SPR & OECD Days of Cover | GEF
global-energy-flow.com
Oil Inventory Levels — US Crude, SPR & OECD Days of Cover | GEF
Where the world's oil buffer stands: US commercial crude ~411.3M bbl (first build in 10 weeks), SPR at 319.5M bbl — lowest since April 1983, total incl SPR ~730.8M bbl, and OECD/EU days of cover — the inventory picture behind the renewed Hormuz crisis.

I don't think President Trump knows squat about oil and natural gas, so he is relying entirely on his staff to advise him, to tell him straight...even if it means, gasp, disagreeing with him. God forbid.


The gentleman above knows better than anybody in the country that if the Permian added 50 HZ oil rigs tomorrow morning it would be at least January 2027 before any of that production came to fruition. Steve Moore, another Trump trusted advisor, an economist who would not know which end of a workover rig to walk to, said this morning thank God for Trump and the Drill Baby, Drill plan because "it's working."


Any increases in US production reported by the EIA the past 3 months, if accurate, have nothing to do with drill baby, drill.
Any increases in US production reported by the EIA the past 3 months, if accurate, have nothing to do with drill baby, drill.

Mike

Amen

Sankey's warning leans on policy risk.


"I would urge the Trump Administration to stay out of this and let the market sort it out. What's made us so strong here in oil and gas has been the free market. Because once the government starts messing with it, as they have in Europe, it ends up as a disaster."


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dckpttndckpttn

Iran War MOU

The MOU is signed, and oil prices are falling like a stone. WTI is down to $75/barrel.


I confess, I do not know what the hell is going on. I guess we'll have to wait and see. In the meantime, oil is underpriced, again. IAE is predicting a ridiculous structural supply surplus of over 5 mmpd by 2o27.


Until the market sees a structural supply deficit and oil stocks going down w/o some artificial cause, like war, the prices oil operators in the US shales will be insufficient to cover costs. Shouldn't the smaller guys be bankrupt by now?

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dckpttn
Jun 19

From what I understand, the IEA tilts toward lower demand and consistently underestimates demand while overestimating supply. This holds the price down, since traders read and believe the IEA. Traders don't need to be right; they just need to be able to predict what other traders will do.


As long as a respected world organization keeps pumping out this stuff, we will see low oil prices. I guess IEA is the inaccurate energy agency, as opposed to the EIA, which is the energy inaccuracy administration.

dckpttndckpttn

$150/barrel oil, here we come.

According to both Chevron's CEO and Exxon's SVR, oil stocks are getting very low. in 2-3 weeks, the cushion will be gone and it will take 4 months to get the oil markets settled down. This will shoot oil up to $150-160 overnight. We are reaching the shortage danger zone. Trump has to shit or get off the pot.

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Mike
Mike
Jun 02

Dick, I agree; they probably should already be $150 given rational, supply/demand fundamentals. What troubles me, deeply now, is that a handful of people in the world, all over the world, can manipulate oil prices so easily.

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