Smart Money Is Piling Into Oil
Oil prices jumped to five-month highs this week, pushed higher by a bullish cocktail of supply outages, geopolitical unrest and a sputtering shale sector.
The most recent factor is the sudden eruption of the long simmering feud in Libya between rival factions. The attack on Tripoli by the Libyan National Army (LNA), a militia led by Khalifa Haftar, led to a spike in oil prices on Monday as the market priced in the possibility of supply outages.
- Wednesday, April 10, 2019
The long awaited Saudi Aramco acquisition of Saudi Basic Industries Corporation (SABIC) is finally here.
With a statement to the press, Aramco CEO Amin Nasser reported that Aramco has acquired a 70 percent stake in SABIC, with an estimated value of $69.1 billion. Aramco's CEO Nasser reiterated that the "deal is a major step in accelerating Saudi Aramco's transformative downstream growth strategy".
Global oil and gas companies are increasingly facing an uphill battle as global warming policies are taking their toll. Most analysts and market watchers are focusing on peak oil demand scenarios, but the reality could be much darker. International oil companies (IOCs) are likely to face a Black Swan scenario, which could end up being a boon for state-owned oil companies (NOCs).
Saudi Arabia isn't buying the peak oil demand narrative.
OPEC's largest producer continues to expect global oil demand to keep rising at least by 2040 and sees itself as the oil producer best equipped to continue meeting that demand, thanks to its very low production costs.
The number of drilled but uncompleted wells (DUCs) in the U.S. shale patch has skyrocketed by roughly 60 percent over the past two years. That leaves a rather large backlog that could add a wave of new supply, even if the pace of drilling begins to slow.
Oil prices regained more ground on Wednesday, pushed higher after equity markets rebounded from an initial selloff at the start of 2019 trading.
The price gains are not entirely convincing. WTI and Brent posted strong gains, each up more than 3 percent by midday in New York, but come largely after U.S. equity markets shook off an earlier bout of pessimism.
To cut and push up prices or not to cut and preserve market share, this is the question that Saudi Arabia is facing ahead of this year's December OPEC meeting. It seems like just yesterday when OPEC met in 2016 and decided to cut production by 1.8 million barrels daily, including from Russia, to reverse the free fall of oil prices.
After declining by more than 20 percent from the October peak, oil prices are showing some signs that they have now bottomed out.
Oil prices are down a bit, but are still close to multi-year highs. That should leave the shale industry flush with cash. However, a long list of U.S. shale companies are still struggling to turn a profit.
An oil price spike is starting to look increasingly possible, with a rerun of 2008 not entirely out of the question, according to a new report.
The outages from Iran are worse than most analysts expected, and bottlenecks in the U.S. shale patch could prevent non-OPEC supply from plugging the gap. To top it off, new regulations from the International Maritime Organization set to take effect in 2020 could significantly tighten supplies.
More than two weeks of nearly uninterrupted price gains for crude oil ended this week, with the rally running out of steam. The question is what happens next?
Oil prices posted steep losses just as the bulls were back on the march. WTI briefly topped $70 per barrel in recent days and Brent was flirting with $80. But the rally was kneecapped by a variety of factors, and it could be challenging to break above those key pricing thresholds in the near future.
Utah holds the largest reserves of oil sands in the United States, but up until now, no company had the technology to exploit these vast resources.
Despite the potential, "only a few companies are pursuing the price-sensitive and water-intensive development of the state's oil shale and oil sand resources," the EIA 
When OPEC and Russia shook on increasing crude oil production by a million barrels daily to stop the oil price climb that had begun getting uncomfortable for consumers from Asia to the United States, there was no sign of what was to come just two months later: slowing demand in Asia, ample supply, and a brewing price war between Saudi Arabia and Iran.
The rivalry between Saudi Arabia and Iran is becoming increasingly evident in the oil pricing policies of the two large Middle Eastern producers. The two countries are currently reigniting the market share and pricing war ahead of the returning U.S. sanctions on Iranian oil.
President Trump's trade war with China, which is still in its early stages, has already battered the yuan. The dollar has gained more than 8 percent against the Chinese currency since March. As Reuters 
When reports emerged that India and China are in talks about forming an 
Coal has stumbled. Renewables have surged. Oil fell hard, then spent years clawing its way back up.
But the biggest change in energy has been in tech.
Saudi Arabia is starting to panic, and is growing concerned that the growing number of supply disruptions around the world could cause oil prices to spike. Saudi Arabia is moving quickly to head off a supply crunch, aiming to dramatically ramp up production to a record high 11 million barrels per day in July, according to 
The ongoing speculation online about the future of cooperation between Russia and OPEC seems to be a little one-sided. The main point of discussion up until now has been the fact that, due to international pressure (such as Trump's Twitter diplomacy, perceived Russian willingness to open up the taps and pressure from Asian consumers) Saudi Arabia will be willing to revoke its current production cut stance.
Saudi Arabia and Russia just destroyed the oil price rally, potentially putting an end to all the speculation about what the group might do next. But higher production doesn't necessarily mean higher oil prices are entirely out of the question, and in fact, the oil market is still faced with a ton of uncertainty.