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Thu Nov 25, 2021, 10:03 PM

Oil Skids on Concerns of Rising Surplus in Q1

Source: Reuters

SINGAPORE (Reuters) - Oil prices slid more than 1% on Friday on concerns that a global supply surplus could swell in the first quarter following a coordinated release of crude reserves among major consumers, led by the United States.

Brent crude futures extended declines for a third session, falling 96 cents, or 1.2%, to $81.26 a barrel by 0130 GMT. U.S. West Texas Intermediate (WTI) crude was down $1.35, or 1.7%, at $77.04 a barrel. There was no settlement for WTI on Thursday because of Thanksgiving holiday.

U.S. President Joe Biden's administration announced plans on Tuesday to release millions of barrels of oil from strategic reserves in coordination with other large consuming nations, including China, India and Japan, to try to cool prices.

Such a release is likely to swell supplies in coming months, an OPEC source said, according to the findings of a panel of experts that advises ministers of the Organization of the Petroleum Exporting Countries (OPEC).

Read more: https://money.usnews.com/investing/news/articles/2021-11-25/oil-skids-on-concerns-of-rising-surplus-in-q1

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Arrow 8 replies Author Time Post
Reply Oil Skids on Concerns of Rising Surplus in Q1 (Original post)
discocrisco01 Nov 25 OP
LakeVermilion Nov 25 #1
Roy Rolling Nov 25 #2
SWBTATTReg Nov 26 #7
DallasNE Nov 25 #3
monkeyman1 Nov 25 #4
durablend Nov 26 #5
Roy Rolling Nov 26 #6
Postal Grunt Nov 26 #8

Response to discocrisco01 (Original post)

Thu Nov 25, 2021, 10:10 PM

1. Good! Serves OPEC right!

I'll bet anything that the Saudis refused to increase production to help their buddy, TFG.

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Response to discocrisco01 (Original post)

Thu Nov 25, 2021, 10:23 PM

2. Bit of Oil History (according to me)

Jimmy Carter broke the back of OPEC by the early 1980s with his energy conversation measures after the first Arab oil embargo of 1974. Speed limits dropped to 55, insulation for houses was encouraged with tax credits, and automobiles had to have a certain MPG standard.

Law of supply and demand broke OPEC, because Jimmy Carter slower American consumption and caused an oil glut and prices collapsed.

Well done, Jimmy, well done.

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Response to Roy Rolling (Reply #2)

Fri Nov 26, 2021, 01:09 PM

7. If we all reduced the number of trips in the car by 1 or 2 trips a week, and kept this up (use...

less gas), etc., we can easily do this, as you suggest.

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Response to discocrisco01 (Original post)

Thu Nov 25, 2021, 10:44 PM

3. Oh, Damn, Biden Is On Top Of This Too

Now we wait to see how Russia and Saudi Arabia will respond, if they do.

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Response to DallasNE (Reply #3)

Thu Nov 25, 2021, 11:07 PM

4. tighten the screws on OPEC ! price gouging at it's best !!

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Response to discocrisco01 (Original post)

Fri Nov 26, 2021, 05:40 AM

5. So OPEC cuts production again and prices go right back up

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Response to durablend (Reply #5)

Fri Nov 26, 2021, 07:42 AM

6. They are Cutting Production *Now*

Thatís the point. Thereís an oversupply, they can cut to zero and it will still take time to reduce oil inventories.

The law of supply and demand rules over oil cartels. OPEC no longer has a stranglehold on world supply. Even then, they need oil revenues to survive so they canít just shut down their biggest cash export.

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Response to discocrisco01 (Original post)

Fri Nov 26, 2021, 02:04 PM

8. The US is the largest oil exporting nation

While the US is the largest exporting nation, the problem is to get the oil to where it is needed most at a cost efficient price if you want lower prices for refined US oil products. Not all refineries are equipped to handle both types of oil, so called sweet and sour crude types, necessitating higher transportation costs and longer lag times before the crude oil becomes product. For example, the oil that was expected to be transported from Canada by the Keystone pipeline was to have an endpoint at the Port Arthur, TX area refineries where it could be refined more efficiently. The refineries there also have a nifty little tax exemption for refined product to be exported to Caribbean countries. Shale oil from the Eagle Rock shale formation in Texas has been sold to refineries in the eastern and maritime provinces of Canada.

Locally in the Kansas side of the KC area, we are seeing prices around $2.75/gallon versus the national average of about $3.40/gallon. That's due to the volume of oil produced in the Bakken shale fields of N Dakota and Montana. The Keystone pipeline was expected to carry some of the excess production that the existing pipelines in the Bakken area can't handle. Every day you can see the long trains of oil tanker cars heading through KC to refineries in the area.

I know that's the way the "oil bidness" works and it's legal but as someone who remembers all the hoopla about "American oil for Americans!", it only leads to me shaking my head when people want to blame the present administration for shortages and price rises.

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