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Thread: Oil Jumps Above $80 For The First Time Since Nov. 2014

  1. #1
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    Default Oil Jumps Above $80 For The First Time Since Nov. 2014

    Oil Jumps Above $80 For The First Time Since Nov. 2014

    by Tyler Durden
    Thu, 05/17/2018 - 06:13





    Two weeks after Saudi Arabia said it was targeting $80/bbl oil, this morning Riyadh got its wishes early when Brent hit the Saudi target, jumping as much as 1% to $80.18, following the latest drop in U.S. crude inventories and as traders continued to fret about the consequences of renewed sanctions on Iran.

    This was the highest price since November 2014.

    Today's jump followed a reported from Goldman titled simply "The case for commodities strengthens " according to which America’s surging shale output won’t be able to replace the potential drop in Iranian oil shipments after the U.S. reimposed sanctions on OPEC’s third-largest producer.
    US shale cannot solve the current oil supply problems. Even if only 200-300 kb/d of Iran exports are at risk by year-end, OPEC is not likely to preempt this loss, only react to it. Further, any response will reduce spare capacity in an increasingly tighter market. The erosion in Venezuela and Angola oil output is accelerating at the same time ex-US growth is stalling. Only the US has seen supply surprises, but is facing growing pains with filled pipeline capacity, constraining US growth into 2019.
    Goldman also noted that physical markets continued to ignore growth concerns - just yesterday the IEA warned that the surge in prices will kill demand - rising rates and USD.
    Only financial markets care, which is why only gold has traded substantially lower with the risk-off sentiment. Growth concerns will likely prove temporary, realized demand remains robust and OPEC has never been able to catch late-cycle demand growth to replenish inventories before a recession occurs. And even if growth were to decelerate further, it would take global GDP growth collapsing to 2.5% yoy to simply balance the oil market! We recommend not 'riding this one out.'
    And confirming that Jeff Gundlach was right in December to go long commodities, Goldman's Jeff Currie said that oil is the "Best performing asset class now posts the best ytd returns in a decade. The rally likely has room to run, particularly from a returns perspective. Oil fundamentals are now more bullish as robust demand faces supply disappointments. We are raising our 12m S&P GSCI returns forecast to 8% from 5% yet markets remain complacent. Specs have declined since $73/bbl under the mantra, 'we will ride this one out' -- dangerous words from a risk management perspective."
    The paradox, of course, is that rising oil prices crush the benefit to the middle class of Trump's tax cuts; crude has rallied this month to the highest level in more than three years after U.S. President Donald Trump withdrew from a 2015 pact between Iran and world powers that had eased sanctions on the Islamic Republic in exchange for curbs on its nuclear program. As we noted yesterday, while the International Energy Agency said a global glut’s been eliminated thanks to output curbs by OPEC, it warned high prices may hurt consumption and cut forecasts for demand growth.
    So far, however, demand appears to be doing fine.
    On Wednesday, the EIA reported that U.S. crude inventories fell 1.4 million barrels last week, while domestic production rose to 10.7 million barrels a day. Despite surging American output, which has topped 10 million barrels a day every week since early February, traders continue to push the price of Brent higher, unconcerned about the torrent of shale production this will unleash.


    https://www.zerohedge.com/news/2018-...-time-nov-2014
    ”The trouble with socialism is that you eventually run out of other people's money.” - Margaret Thatcher

  2. #2
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    If gas prices rise steeply, will this mean lots of repos on overpriced trucks and SUVs from people who could barely make the payments when unleaded was cheaper?

  3. #3
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    Back to work on the shale oil fields again. And the many sands companies that had laid off workers will now get busy once again as the price is now where they can ALL make money. When oil is so low it was not profitable for many smaller companies to keep doing the shale oil side of things. And in my area these huge sand companies, and there are a lot of them, were laying off right and left. Now I bet things will start to pick uno big time once again.

  4. #4
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    Quote Originally Posted by moestooge View Post
    If gas prices rise steeply, will this mean lots of repos on overpriced trucks and SUVs from people who could barely make the payments when unleaded was cheaper?
    LOL,,do u even bro diesel?? Wa,? man i cant drive my $70,000 dollar truck around with my flat brimmer hat while doing da bro-country tunes shtick?

    I laugh, these retards are going to get it.
    "On hire from Swiss or Sweden, be me Christain, be me heathen,The Devil to the sabre I shall put"

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