More rigs, more output, lower oil price

Globally, 40% more oil and gas rigs have been put to work compared to 12 months ago.

In the U.S., the amount of rigs which snapped back to life doubled since last August.

Rigs in operation throughout Latin America have nearly doubled in number.

While the Canadian’s have trebled.

Interestingly, the amount of rigs deployed in the Middle East and Europe have declined.

Overall, more drilling leads to more output which puts a lid on the price of oil, which coincides with my bearish call on crude.

What else does the table below tell us?

The Saudi’s are trying to keep output tight in order to keep prices high, because ‘petro-nations’ need ‘petro-dollars’.

Carbon conscious Europe and their headquartered hydrocarbon giants (BP, Total, Statoil, Shell, Repsol, ENI) are trying to drill less.

The Americans need to drill to service the consuming citizens, make money, use their capex, satisfy shareholders and avoid being a net importer of oil.

And the Canadians are just ecstatic that extracting tar sands oil became economically viable again.

September 8, 2021

by Rob Zdravevski

rob@karriasset.com.au.

‘Petro-Nations’ need ‘Petro-Dollars’

Keep this in mind when you ponder the price of oil and the supply/demand equation.

https://www.bloomberg.com/news/articles/2021-08-22/libyan-central-banker-pins-revival-hopes-on-higher-oil-output?sref=qLOW1ygh

And then when you add OPEC+ efforts to machinate a higher price by curtailing output, a nation reliant on oil receipts means oil supply will find its way to the market.

There remains a reasonable case for Brent Crude to visit $64 and failing to hold that, a trip to $57 and $54 are entirely plausible.

More so, watch when a petro-nation panics after having missed out on a selling at $76 per barrel because OPEC botched a manipulation effort trying to send it to $90.

August 24, 2021

by Rob Zdravevski

rob@karriasset.com.au

Nat Gas may halve before it doubles again

Lately, I’ve been calling an interim top in Crude, highlighting extreme overboughts in Gasoline, Heating Oil and Distillates and a peak in the Australian Dollar.

Natural Gas has also touched some extreme overboughts where a Long trading exit target of $4.07 was hit.

Now, I think petroleum prices ease lower over the medium term while Natural Gas may nearly halve in price in the next 10 months or so.

Crude prices lead Natural Gas prices. Crude is down $12 since I made my recent ‘top’ call.

Below is picture of how I think it may play out.

You can see the resistance and supports it needs to test or break and this will help tell me if I’m wrong.

If the scenario below evolves, you’ll also see weaker (commodity) currencies such as the AUD and CAD while the U.S. Dollar strengthens.

August 9, 2021

by Rob Zdravevski

rob@karriasset.com.au

Still looking for lower oil prices

Brent Crude has fallen 12% since my note (3 weeks ago) called a peak.

Last night’s 6% decline (to $68.75) suggests and adds a little more strength to the downward trend.

The two links below discuss my bias for lower prices.

For now the $62 mark is a spot to watch and certain technicals over the coming weeks will help me decide if a new Long position is established there or around the $57 level.

July 20, 2021

by Rob Zdravevski

rob@karriasset.com.au

Drilling activity is increasing

Globally, 5% more rigs have been put to work since last month.
An increase of 63 rigs and it’s being seen in the America’s with the Canadians becoming notably busier.

I’ll assume tar sands become more feasible with Crude at $75?

As goes Oil, so does the AUD

And as a follow up to the previous Brent Crude oil post,

the chart below may tell us what happens to the Australian Dollar compared to the U.S. Dollar…..

should Brent Crude decline

June 28, 2021

by Rob Zdravevski

rob@karriasset.com.au

Looking for interim peak in Crude Oil

Here’s a market call for you….Brent Crude is about to top out at the $78.50 level.

I’ve been bullish about the Oil price for the past year and remain so over the longer term, but parabolic advances also need a break and some consolidation.

My technical work suggests the crude oil price peaks soon and comes back to test the $64-$62 mark in the coming months.

See my 20+ year chart below. Amongst many extreme coincidences, we are also nearing a 50% move (between the 1999 low and the 2008 high) along with testing the underside of an ominous downward sloping trendline.

Anecdotally, many now are calling Oil to a $100…..and so I ask, where were they when Brent was $30 or $40….another moment of popular pundits making calls at the nutty end of a run which has seen Brent Crude Oil nearly quintuple from its $16 low in March 2020.

Ultimately, I think Oil goes to $120 – $140, in a massive ‘last’ hurrah…I’ll write more about that in a few months time.

For now, it’s time for the Oil price to shake a few people out and I love a good shakeout.

This also means having a think about your Oil & Gas equity positions.

In fact, many of them are already exhibiting weakness.

June 28, 2021

by Rob Zdravevski

rob@karriasset.com.au

The Woodside anomaly

The ‘de-correlation’ and anomaly of the Woodside Energy (WPL.AX) share price.

May 31, 2021
by Rob Zdravevski
rob@karriasset.com.au

Oil continues marching higher

My current read of the Brent Crude Oil price is….

if it closes above $70, then there is clear air to the $74-$76 region, while probability of a spurt to $80-$82 remains, such a move would swing the pendulum into extreme territory.

and then we’ll see OPEC start to increase output.

Basically, traders are waiting for a break above $70 and if they see it, then watch them pile in.

for context though, going Long Oil today (currently trading at $69.50) is a marginal bet. I see the risk/reward equation as being either $6 up or down.

After all, Brent Crude already seems stretched on various measures after having tripled from its $16 low in April 2020. Establishing a new ‘long’ position at this moment is akin to squeezing the last 10% out of a trade.

Keep in mind, that markets tend to move in the direction where they can inflict the most damage……..and a $80 oil price would hurt more (politically and commercially) than if fell to $50.

March 12, 2021

by Rob Zdravevski

rob@karriasset.com.au

Reviewing Times Of Oil Excess

I wrote the linked article in September 2012 when Oil was trading at $117, predicting bearish times ahead.

Since the rout in the first half of 2020, I have been an oil bull.

https://robzdravevski.com/2012/09/17/lower-oil-prices-by-2020/

March 5, 2021

by Rob Zdravevski

rob@karriasset.com.au

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