The Real Reason U.S. Oil Producers Are Exercising Caution BCO WTI SHORT SHORT TERM MIDTERM LONG
Sky-high oil prices have left both America’s oil industry and its President pointing fingers at one another.
Biden has repeatedly called on the oil industry to increase production, but the industry has been slow to act, and perhaps for good reason.
Historically, the oil industry has ramped up production when prices rose to meaningful levels, but the crashes have provided producers with some key lessons along the way.
In the months leading up to the Covid-19 pandemic, U.S. oil production hit an all-time high of just below 13 million barrels per day (BPD). As the pandemic unfolded, demand collapsed, and production followed. By May 2020, oil production had dropped by more than 3 million BPD to 9.7 million BPD.
Since then, demand has recovered to pre-pandemic levels. Oil production, however, has only partially recovered. The most recent data available from the Energy Information Administration (EIA) shows current U.S. oil production at ~11.6 million BPD — still 1.4 million BPD short of pre-pandemic production. This shortfall is a major factor that led to the run-up of oil and gasoline prices over the past year.
When the pandemic crushed oil demand in 2020, some oil companies went out of business. Some small stripper wells — which accounts for a respectable amount of U.S. oil production — were permanently capped given the bleak outlook. Some workers left the oil industry.
Now, with oil prices over $100/bbl, many are questioning why production hasn’t bounced all the way back. The Biden Administration has pointed fingers at the oil industry, stating they have stockpiled 9,000 permits they aren’t using. The oil industry says that the problem — in part — is the hostile policies of the Biden Administration.
Setting politics aside, here is what we know. The part about the oil industry stockpiling permits — mostly ahead of President Biden taking office — is true. I have reported on this before. However, that doesn’t mean they are sitting on them.
Obtaining a permit is just one step in the chain that ultimately results in oil production. There are many other links in that chain, some of which are still problematic today. Further, they can’t just sit on the permits. There is generally a “use it or lose it” provision that requires them to give up a permit if they don’t develop the lease over a specified period.
Thus, we have oil production that can’t bounce back quickly because some has been shut in, and new production that can’t proceed as quickly due to manpower and material shortages (e.g., fracking sand). It’s not simply that oil companies are sitting on permits. They are working through them. The number of rigs drilling for oil and gas has risen by 60% over the past year. But it can take years for a permit to translate into oil production (if the location even yields oil).
But why did they stockpile so many permits? Stacey Morris, who is Director of Research for midstream index and data provider Alerian elaborated on these issues when I reached out to her for comment:
“The President mentioned thousands of permits on federal lands. The permit number is inflated from stockpiling. Companies stockpiled permits on federal lands leading up to the President’s inauguration, because several Democratic candidates, including the president, supported banning new drilling permits on federal lands. Permits do not equate to production. There are a number of steps between securing a permit and actually bringing a well to production, and issues like labor constraints and fracking sand shortages are added obstacles.”
That leads me to another issue with the oil companies themselves, where Ms. Morris added:
“Investors have demanded that producers maintain capital discipline and grow volumes modestly. Returns have taken priority over growth. Up until recently, a producer planning to significantly grow production volumes would likely have been punished by investors. However, that sentiment may be changing with oil prices where they are and the potential need to replace Russian barrels on the global market.
The geopolitical situation and oil price level may give US producers a license to grow volumes more meaningfully. It takes time for producers to respond to prices, though, and the price signal was not strong enough for E&Ps to potentially veer from their plans for moderate growth until recently. Private producers have been able to ramp upstream activity more meaningfully given that they do not have to answer to a public investor base.”
Oil companies regularly lose money. In four of the past ten years, the oil industry lost money. Big oil lost $76 billion just two years ago. Therefore, they are proceeding with caution. They are maintaining more capital discipline. They aren’t rushing to do projects with the assumption that oil prices will remain above $100/bbl. They are doing projects with the assumption that in a year or more when the projects might pay off, oil prices will have retreated to well below $100/bbl.
On this issue, the Biden Administration is correct. The oil industry is going slow. But this belies a misunderstanding of how long it takes to execute a project. Oil companies don’t have crystal balls. They have to make decisions now based on where they think prices are headed. Because of multiple collapses in oil prices over the past decade, they are proceeding with more caution and capital discipline.
These are issues in which there seems to be a great deal of misunderstanding — which leads to finger-pointing — between the Biden Administration and the oil industry. Given the circumstances, as I wrote previously I believe the Biden Administration should convene a summit with the heads of the major oil companies. There should be frank dialogue, and the outcome should be clearly communicated to the world.
Oilshort
The Black Bull Will Officially Become THE RED BEAR #Oil looking ready for for a retrace after its blow off top. $ to be made on both sides if you play it right.
#BlackBull
99.0 -> 106
89.5 -> 115.25
84.75 -> 117.25
After this B Wave, The Black Bull will Officially become RED BEAR for an ugly, but profitable C Wave down...
What are your thoughts?
-- NCCM
OIL trend has changed. Big profits on shortA simple analysis of the trend without indicators just following the basic trendline guidance.
As we see with don't have an uptrend anymore and that will be more clear the next 2 days.
If nothing bad happens again between Russia and Ukraine i think we will go back to the 80-90 dollar region fast.
So we go short expecting huge decline and high profit.
Good Luck to all, hope you all make money this week.
Oil in the fall? update (2)This analysis is purely a personal analysis
Reaching the desired price range, we will review it once again
Hints
1. This analysis is checked in the weekly time frame, so each of the waves has the necessary time to form between a few weeks to several months, and a total of one to two years.
2. For convenience, it refuses to go into details so that the trader can easily understand it.
3. The study was performed in the form of Elliott and canalization using Macd indicator
Analysis Description: Oil is on a long-term upward trajectory annually, so after the proper growth of oil prices and the failure of the downtrend, higher goals are pursued, but what is clear is that each impulse step needs a active step to rest.
So it can be said that in the next few weeks to a few months, the oil route is expected to be relatively upward to reach its $ 114 target to complete a complete cycle.
And then it enters a correction cycle that can take up to two years, so expecting to see $ 35- $ 45 as a midline target is not unexpected.
Note:
Proper insight into considering all possible scenarios then
1. Short-term visions Long-term to medium-term are well defined
We have a temporary uptrend and targets of $ 114 and $ 105 for it
Then for several months the rest of the movement shifted and, the price suffered
And then move to the channel midline for several months
At the end of this analysis is only a personal analysis and there is no certainty in doing or not doing it ......
Short Opportunity on WTI OIL According to UPtrendline channel
Pullback by Resistance level
Divergence on CCI
Corrective Wave
Fibo retracement
Previous Weekly Analysis
WTI Oil Coming Lower to 1980s After Russian De-escalation? Currently Oil is sitting at a resistant trendline on the higher timeframes with a strong bearish candle being printed so far, about 2% down today. We've formed a double top on the timeframes below and after a brief pullback we're ready to move lower. This change in sentiment comes from the news that Russia has begun to withdraw troops off of Ukraine's borders but still looking to show off it's military power in drills that will take place in the future. Western media were salivating for war with Russia, an enemy it has built up in recent years, but in leaked wikileaks cables from 2008, Russia predicted the destabilization of certain Ukraine regions once the West tried to push into Ukraine because pro-Russian communities would begin to fight back. This has since come into fruition since 2014 and so Russia are clearly not acting on a whim, but rather a strategic posturing I would call recent events. Putin has not been afraid to downplay the strength of the Russian military in comparison to that of certain Western countries so it doesn't come as an ego damage that he would remove some troops. We'll see how this plays out but the situation has been overly exaggerated and now we will see outflows from safe havens if the above still holds through in the days and weeks to come.
OIL-BRENT - 18 Feb. 2022The price is moving in a downward channel towards lower targets.
Support and resistance areas are marked on the chart. When the price reaches the green range, we have to wait for the reaction of buyers or sellers
This is my personal opinion. Please do not trade based on my analysis and data.
USDOIL Crude Oil top | Retracement level targetCan i call the $92 level the 2022 top for Crude oil???
We might see a retracement in USOIL after Russia reported pullback of military troops.
Some military units will start returning to their permanent bases after completing drills near the Ukrainian border, said the Russian Defense Ministry.
Extending the Fibonacci retracement tool, my price target for crude oil this year is the $79 support.
Looking forward to read your opinion about it.
OILhello dear treaders any news from oil ? ok.. let me read the chart oil. first of all lets take look at the oil chart We see that oil is rising sharply Now at what price can this price increase continue? No one knows But the traces of investors can be understood from the chart. Of course, one of the factors that has oil rising in this way is the tension between Russia and Ukraine.
In the oil chart, I see resistance from $ 100 to $ 105 even higher, but it is also possible that all of this will be broken because of the Russia-Ukraine war.
But if nothing happens and there is no war, the high resistances that you see in the chart can be activated and the price will fall.
If the price falls, it falls well because there is no demand area to keep the price because they are all consumed.
At the moment, in this political crisis, I can neither signal buying nor selling, I just have to combine all of these so that I can give you the right analysis.
Good luck.
Oil short ?Price has moved up for the past 6 weeks with no significant retracements. + Overly bullish psychology. Many predicting $100 oil.
DISCLAIMER: This is not financial advice.
The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
CRUDE OIL SHORT COMING SOONHi there,
As you can see, we got a DIVERGENCE on the HIGHER timeframe on the RSI and PRICE ACTION.
PRICE ACTION is rising whilst RSI is getting lower. So We can conclude that a DROP is coming SOON.
Our ENTRY will be on MONDAY 3hrs after MARKET opens because we STILL NEED to CHECK FOR FURTHER CONFIRMATION before entering the drop.
Our PROFIT TARGET will be the minor support level and potential the MAJOR support level.
kind regards