Discover and read the best of Twitter Threads about #OOTT

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Let us look at US crude & product inventories. It remains the largest refining system globally & by far & away the most transparent market which is why US inventory data matter for crude oil prices globally (although less so now than in times pre-global satellite data).

#OOTT
All-in, US crude & product inventories incl. SPR are 35Mb below their 10-year average at 1,825mb (blue line). They are 100Mb, give or take, away from hitting a decade low. With 50Mb SPR release, we may get their in Q1 2022 and subject to Omicron effects.

2/.. Image
The same data in a 5-year average scenario? We're already 125mb below its 5-average. Kind of interesting. Mind you - commodities price at the margin. So this is an interesting combo with WTI at $68/bbl (ex Macro Set-up).

3/.. Image
Read 17 tweets
Why did opec plus decide to rollover policy keeping the 400k increments? 1. Think about it, over the past months the group has not been delivering the 400k anyway due to some countries not delivering their quotas, so the supply they promised to the market isn’t fully back. #OOTT
2. All countries that have spare capacity in the group wanted to increase production, that’s why the meeting was very smooth and consensus was reached fast. #OOTT
3. By keeping policy unchanged Opec plus managed to place a floor for oil prices at around the $70 mark #OOTT
Read 8 tweets
🚨 NEW POST 🚨

🇺🇸🛢️😬 My latest Commodity Context looks the lackluster US shale patch recovery and explains why it's a BIG problem for the post-COVID oil market unless US producers start drilling more real soon. #oott #eft

Read, subscribe, & share here:
commoditycontext.substack.com/p/shale-lacklu…
I'm a big fan of maps & this is my way of understanding the relative importance of the different major shale regions.

Permian is most of the oil, Appalachia is most of the gas.

Oil dominant regions = 45% of gas output, while gas-dominant regions = only 2% of oil. #oott #eft
The Permian Basin's relative outperformance vs the rest of the shale patch is well known but it's even more stark than I imagined going into this piece.

Permian setting new production highs while the rest of the oil-dominant regions are still down 20-30%. #oott #eft
Read 6 tweets
Time to discuss the ugly cousin of 2021.

The cheapest, most attractive risk/reward part of the freight world.

The best value that I see in the whole commodity spectrum(apols #uranium clan).

You might have already guessed it; it’s finally time to talk abt #tankers #OOTT 1/n
had to keep on producing, floating storage was the only solution leading to a majestic surge in freight rates. As lockdowns eased, floating storage was no longer needed, thus supply came back online while demand was nowhere near 2019 levels. Naturally the mkt collapsed. 3/n
To date it has not recovered. 2021 has been an annus horribilis for the tanker market. Indicatively, $VLCC ytd returns are -$615/day (not a typo!). At the same time demand was getting normalized and $OPEC was steadily increasing production. 4/n
Read 12 tweets
At the end of a busy day, a few thoughts on today’s SPR release: 🧵 #OOTT
Effectiveness should be measured not by price response today but what it would have been absent the “verbal intervention” of the past few weeks. Expectations of a release contributed (tho not entirely responsible) to drop of $8/b since Oct & helped stem price run up.
It’s notable because it is not an emergency response to a severe supply disruption, as required for a major sale, but (as an exchange) an effort to tame higher oil price expectations amidst deep concerns about inflation.
Read 13 tweets
Few conclusions about today's large global release from strategic inventories from the US, China, Japan and India #oott #opec
1) this large/coordinated release of strategic stocks is aimed to inject more oil in markets at the time when OPEC plus has created a sense of scarcity. This coordinated action is a novel way to counter producers' slow action by forcing liquidity in the system #OOTT #OPEC
2) 1)If OPEC+ was acting a the central bank of oil as it like to say, the strategic stock release is a counter injection of liquidity to lower prices. In Central Bank parlance, another central bank injected liquidity to lower rates #OOTT #OPEC
Read 11 tweets
Thread
1- While #Iran as a country will benefit from lifting the sanctions, influential elements within the regime, along with certain influential groups in neighboring countries, will lose. Hence the opposition & the slow response. It is corruption & money, not politics. #OOTT
2- The US and its allies will commit a big mistake if they go to the negotiations at the end of this month with the logical arguments on how Iran as a country will benefit. I was surprised to learn yesterday that some democrats think Iran doesn't export oil because of sanctions!
3- US allies in the Gulf have no interest in such negotiations because they do not see any benefits.

It will be a big mistake on the part of the Biden Administration if it ignores this point: How to align the interests of Gulf states with the interest of the US.
Read 6 tweets
1/ A few thoughts on the politicization of #energy markets spurred by these remarks from @SenWarren. There's nothing worse than intellectual dishonesty from intellectuals. Either @SenWarren is purposefully misleading or doesn't understand how energy markets work. #OOTT, #EFT
2/ Let's set the record straight. #Oil and #gas prices prices are up because of a supply/demand imbalance and a lack of investment in new production finally catching up to demand. Can briefly see more below, or look at data from @IEA or our own @EIAgov.

3/ $XOM and $CVX together produced just over 4m bdp of oil in Q3 '21, which is less than 5% of global production (~96m bpd in Sept). They don't exactly have pricing power. Shouldn't the Senator leading the antitrust charge understand what's monopolistic power and what's not?
Read 14 tweets
1/3. Super high strike Brent and WTI call spreads are trading. Cue angry comments about how they're a stupid idea and won't make money. bloomberg.com/news/articles/… via @markets #OOTT
2/3 Earlier this year similarly wild (at the time) $99/$100 call spreads traded for Dec. 2022. They cost 1c each. At current values they're trading at 18c. One day 13k lots traded, costing $130,000. Those would now be worth $2.34 million (very roughly). #OOTT
3/3 So really, rally keeps going and you time it right, you don't just make money, you make quite a lot of money. All of which, most, if not all of you know. But it's worth reiterating the point. #OOTT
Read 3 tweets
💸 Is hyperinflation a reality? How to protect yourself?

Money may well depreciate at times. This has already happened before, even in developed countries. #Inflation in developed world is accelerating, and the authorities are carried away by populism. Image
• In the #US, inflation has already accelerated to 6.2%
• In #Germany, it reached a 28-year high of 4.5%.

Authorities of developed countries put above #inflation problems of #SocialJustice in labor market (employment in all minority groups is important) and #climate warming. Image
Populist views are capturing the minds of monetary authorities, which only fuels #inflation. This was the case in the #USA in the 1970s: prices almost tripled.
And sometimes it was much worse: in Israel in the 1980s, prices for goods jumped ~10,000 times. Image
Read 10 tweets
Thread on why the Biden Administration is wrong in asking OPEC for more crude oil supplies & why #OPEC was right sticking to its planned increases:

1- There are no crude shortages. There are no refiners who need oil and cannot get it. #OOTT #SaudiArabia
spglobal.com/platts/en/mark…
2- Demand is NOT higher than “supply”. Several media outlets and analysts are confusing “supply” with “production”.
US crude oil inventories increased by about 20 mb in recent weeks. They are about 40 mb above the level that would support a bullish case.
3- It takes months for additional crude production to appear in the market as gasoline. The US problem is in the refining sector, not only because of recent hurricanes but also because of chronic problems and heavy regulations. #oil #OOTT
Read 11 tweets
#OOTT The darkness over the FF industry is starting to lift. Investors are realizing that the TOTAL ENERGY pie is expanding and will continue to expand for the foreseeable future. 99% of Wall Street have no clue what life is like in the developing world. Electricity demand
#OOTT 2/ is about to go S curve. As the energy demand curve expands, every source of power will be tapped. Will renewables be the fastest growers-probably as its base is low. On a % base it will lead, but on an absolute base, unlikely as it can not scale. Witness Vestas
#OOTT 3/yesterday. Ugly earnings and market report. Why? Because steel prices are up and components are in short supply. Trick question. When did biomass and coal use peak? Answer; Not yet and still growing despite the Greenies effort. Can we produce power better? Of course
Read 7 tweets
#OOTT | #EIA weekly data
#Crude stocks +3.290M
#Gasoline stocks -1.488M
#Distillate stocks +2.160M
#Cushing stocks -0.916M
#OOTT | #EIA: US East Coast crude oil imports rise 40%.
Read 6 tweets
#OOTT Oil prices retreating. No surprise as the tree gets shaken. The backwardated curve is losing some of its steepness as the mkt is expecting an SPR release. OPEC+ is going to stick with its plan, but the cheating will begin from the players that can over produce. Enjoy
#OOTT 2/ the downdraft while you can as the winter months are around the corner. With the $NG situation, products are in demand (diesel, kerosene, etc). Demand is going up across the energy spectrum. It is a slow increase, but persistent. US shale has spoken-flat output
#OOTT 3/ in 2022 unless Mr. Market starts rewarding current shareholders. Otherwise it is debt pay down, divvies and share buy backs. On the political front, the Virginia Governor race is almost confirming a switch in Congress next year. The Biden Admin is on the ropes
Read 4 tweets
US crude oil futures fall below $82/bbl, down 2.3% on the day; Brent crude oil futures extend decline to 2%.
#OOTT
Crude oil futures fall further, WTI down 3%. #OOTT
Oil futures extend losses, Brent crude down $2 a barrel. #OOTT
Read 4 tweets
Thread of 8 Charts on the oil politics between the Biden Administration and OPEC! Looks like a story!
#Oil #OPEC #Biden #OOTT #COP26
1-8 I am using IEA demand numbers so no one can say OPEC numbers are self-serving.
2-8
Notice that the demand gap shown in the IEA chart above is bigger than the OPEC production gap!
#OPEC #Oil
3-8
Saudi crude oil production is almost back to normal and will exceed 2019 levels soon.
#SaudiArabia
Read 8 tweets
Two days ahead of the OPEC+ virtual meeting, US President Joe Biden is pointing fingers: "If you take a look at gas prices and you take a look at oil prices that's a consequence of thus far the refusal of Russia or the OPEC nations to pump more oil" #OOTT
The White House is, in some ways, boxing itself in a corner. If Saudi Arabia and Russia call the threats a bluff, President Biden will have two options: quickly counteract (SPR release?) or retreat and look weak. Both options have a lot of downside for the White House | #OOTT
The very public American pressure on OPEC+ keeps building up, with U.S. Secretary of State Antony Blinken asking his UAE counterpart also for an oil production increase on the sidelines of the #COP26 meeting in Glasgow | #OOTT
Read 5 tweets
Global oil majors are back in the black—but for how long?

Something is different about this #oilprice spike. Instead of rushing to drill, oil companies are cutting their capex, reducing debt and paying more to shareholders.

What’s going on here? 🧵
Former sources of value have become vehicles for destroying value. Investors—and, we suspect, even company management—understand that more drilling and expensive acquisitions are a bad bet.
High oil prices mean renewable energy, EVs and the variety of industrial moves to decarbonize are incentivized. Even volatility, the short-term problem caused by rising prices, is sufficient to drive calls for more rapid adoption of alternative fuels. ieefa.org/ieefa-u-s-pric…
Read 7 tweets
LARGE CAP #PERMIAN PLAYER $FANG PLANS TO KEEP #OIL PRODUCTION FLAT IN 2022.

#OOTT
"As we move into 2022, we are still seeing excess oil supply and varying demand recovery profiles across the globe. As such, we remain committed to capital discipline and our plan to return excess Free Cash Flow ...
...to our stockholders. By keeping our oil production flat in 2022, we expect to be in a position to maximize Free Cash Flow, grow our dividend, further pay down debt and overall return more capital to stockholders.”
Read 3 tweets
China's most-traded thermal coal futures open down 4.6% in night session on increasing coal stocks and improving supply and demand conditions.
#Commodities #China #coal #coke
China's most active coking coal futures, coke futures fall about 2.4%.
#Commodities #China #coal #coke
Shanghai INE's crude oil futures rise 1.75%, low sulfur fuel oil futures up 1.5% as global benchmarks rally. DCE's LPG futures rise more than 3.2%.
#OOTT #Shanghai #China
Read 4 tweets
Biden: Not rational to think can transition from oil overnight. #OOTT
Biden: Should move more rapidly to renewable energy. #OOTT
Biden: Idea Russia, Saudis aren't going to pump more not right.
#OOTT #US #Russia #Saudi
Read 4 tweets
A short thread on why I believe Oil & Gas demand will continue to rise despite all climate talks

1) We need to recognize, Demand Growth will remain high in APAC & Africa for O&G products despite all renewable initiatives.

#OOTT #Oil #Gas
2/ After Gasoline & Diesel the highest proportion of product consumption is LPG.

A major product in Domestic and Industrial cooking. APAC & Africa alone have >2 billion people without proper access to this fuel.

Ofcourse Natural Gas can contribute but #LPG is popular here.
3/ To given an idea, how big LPG consumption growth could be

#India in last decade is growing 7 to 8% LPG CAGR. Highest growth rate among all Oil products. Not Gasoline nor Diesel grown at this consistent pace

Now link back we still have ~2 billion without clean cooking access
Read 5 tweets
🛢️⛽️ My latest Commodity Context post is an update to my near-term oil market view.

🐮 Oil markets remain tight & inventories drawing

BUT

🐻 Short-term headwinds rising: COVID shifting from tail to headwind & sentiment shaky #oott #eft

Full piece here: commoditycontext.substack.com/p/oil-strong-b…
Short chart summary 🧵:

Starting off with calendar spreads and futures curves.

🐮 We're seeing exceptionally acute backwardation in both WTI and Brent crude.

Calendar spreads have been pretty wild, but the important thing to remember is that they drive INVENTORIES. #oott #eft
🐮 And oh boy is that STEEP backwardation drawing inventories.

Since August 2020 we've drawn more than *400 million barrels* out of OECD commercial inventories, the strongest draw ever.

Pace of outflows only matched by the builds that cratered oil markets in 2014-16. #oott #eft
Read 8 tweets
1-2 Unfortunately, the question, which is the headline, is one thing, and the content is something else. But since I have done a lot of research on this and I taught the materials for years, I can see the source of confusion.
#OOTT #Oil

reuters.com/business/energ…
2- In economics, everything is determined at the margin, therefore, shares and percentages are less relevant, if any. The impact of increasing oil prices depends on the reactions of the governments and central banks. See my pinned thread
3- Oil prices increased drastically between 2004 and 2008… all major economies, including China and India, enjoyed healthy economic growth… Why record oil prices had no impact then? Is conventional wisdom wrong?
Read 9 tweets

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