The Global Game of Chicken: OPEC+, Short Sellers, and Record U.S. Oil Production
Date 7/18/23
In a global game of chicken on the world’s grandest stage, OPEC + has repeatedly bragged about its production cuts and collaborative stamina in its efforts to bring “price stability” to the market. On the other side, the brash Wall Street paper trading short selling energy traders said “Hold My High Noon” and scoffed as prices continued to decline. Not so fast my friend! Last week the tide seemed to have turned, with Russia’s announcement that they would join the “ouching” party with their own round of production cuts. It seems as if the short sellers blinked, as positions were closed out and oil prices started to rise. Brent crude futures settled at $79.87 per barrel, with WTI closing the week at $75.42 a barrel with both indices gaining about 2% for the week. Just how long the OPEC+ members, particularly Russia, can hold their water and keep the cartel from fracturing will be subject to much skepticism. Someone is due to end up with a ginormous “L” on their head.
Despite what some media outlets and presidential hopefuls might be portraying, U.S. crude oil production is on track to set a record this year, up 9% year over year. The EIA predicts that total U.S. output will hit 12.6M bbl/day in 2023, which would exceed the record production from 2019 of 12.3 bbl/day. How about them apples? Half of the new crude coming onto the global market is from the good old USA. U.S. oil exports touched a record 4.5 million bpd in March. The export market is very volatile, driven by a confluence of factors. Certainly, if we don’t see an increase in rig counts, these volumes won’t be sustainable. Having said that, you always need terminals to move oil from A to B. The Tank Tiger had a busy week indeed, fielding inquiries for storage of Ethanol, gasoline, diesel, asphalt, biodiesel, tallow, Veg Oil, Glycol, Fuel Oil, Jet Fuel, and Propane. We hurried and scurried to pick up our toys and secure tanks for the good folks who continue to utilize our free service. By the way, if you have interest in being notified of these inquiries, as they occur, just let us know.
Did anyone notice that $$$MR. MARKET$$$ completely nailed it with his inflation figure prediction last week? He is HUGE! Bring him your finest meats and cheeses. The Consumer Price Index rose 3% Y/Y in June, down from a 4% headline rate in May. Wall Street rejoiced with some hefty weekly gains. Recession?? Dude, where’s my car?
