Good day to buy Brent Crude Oil? ... Biden is releasing oil from the Strategic Oil Reserve

[Melensdad]

We clearly have an oil shortage in the world, the US, while producing a lot, is capable of producing a lot more but regulations and held up leases and other policies have hobbled our ability.

So gasoline, diesel and natural gas prices are going up. Up. UP.

In response the President of the US has announced he will release 1 million gallons of oil per day, from the strategic oil reserves from now through ELECTION SEASON. Hmmm?

But looking at it, it is going to fall short of the demand. Very likely won't affect the price at the pump more than a few cents. And also very likely it won't bridge the gap until the US ramps up production either. However, today the price of Brent crude oil is dropping. Traders seem optimistic and some people are probably selling to capture their short term profits.

Seems like a buy opportunity to me. I've made a decent amount of money trading Brent Crude in the past few months. I'll be buying today, we have a 6+% drop and people haven't done the real analysis on the fact that the influx from the strategic oil reserves is not going to be a good long term solution.

 

[Melensdad]

Biden is screaming that oil companies are not pumping fast enough. That there is price gouging. But he created the situation through regulations that started his 1st days in office through executive orders and have continued up to today.

Just in case you are not paying attention, there is no new output coming from America anytime soon:

Shale Growth Constrained By Supply Chain Bottlenecks | OilPrice.com

Though the U.S. shale industry is scrambling to ramp up production, supply chain bottlenecks could cripple its growth potential

oilprice.com

 

[FrancSevin]

What was the purpose of having the "Strategic Oil Reserve?

It wasn't for this. Or we would have called it the Political Popularity Rescue Reserve.

 

[Melensdad]

I was under the impression the SOR was to be used by the military to make sure our armed forces had the ability to defend the nation and/or wage war independent of the world situation. But I actually never researched the actual reason.

 

[XeVfTEUtaAqJHTqq]

I'm pretty sure everything the Federal Government controls these days is going to be used to manipulate voters into keeping the controlling party in power. We are living in the movie Idiocracy.

 

[Melensdad]

Uh oh . . . looks like Goldman Sachs analysts did their homework.

Anyone want to bet that oil opens higher when the markets reopen?

Zerohedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

The Biden administration confirmed a record large Strategic Petroleum Reserve release of 180 mb over the next six months to fight the "Putin price hike at the pump", with the potential for other countries to release 30 to 50 mb. As noted earlier, while such a release will help trim prices in the short-term, increasing supply and commensurately reducing the amount of necessary price-induced demand destruction - the sole oil rebalancing mechanism currently available in a world devoid of inventory buffers and supply elasticity - it will lead to higher prices over the longer-term as the government's panicked, political intervention in the energy market which is obviously meant to avoid a Democrat wipeout in the midterms will discourage any rational investing in supply by US majors. Furthermore, a release of inventories is, only a temporary source of supply and in fact, as Goldman notes, lower prices in 2022 support oil demand while slowing the acceleration in shale production, leaving for now a deficit in 2023 with an eventual need to refill the SPR.

As a result, in a note published late on Thursday, Goldman updates its oil supply, demand and price forecasts accordingly, in which the bank is increasing its already expected SPR release to match today’s announcement of 1.2 mb/d over six months, while delaying an expected ramp-up in Iran exports to 3Q22 given delays coming to an agreement and the lag in the required certification for exports to resume. Separately, Goldman's expectations of a 1 mb/d hit to Chinese demand due to lockdowns in 2Q remains unchanged, with OPEC+ expected to stick to its scheduled quota increases through 3Q22 consistent with today’s decision. Finally, the bank is also increasing the probability of a Moderate Russian export disruption scenario (to 50%), implying a slightly larger loss of supply in our weighted mean outcome.

STORY CONTINUES . . .

 

[Melensdad]

And more analysts say that what Biden is doing is not much more than smoke and mirrors and the long term effect could actually be harmful. Go figure.

Biden says latest Strategic Petroleum Reserve release could cut gas prices 10 to 35 cents per gallon — but some experts worry about long-term costs - Market Trading Essentials

President Joe Biden announced Thursday the daily release of 1 million barrels of oil from the countr

www.markettradingessentials.com

Full story at the link above . . .

. . . Market volatility makes it tricky to say with great certainty, but the costs savings might be between 5 and 10 cents a gallon in a matter of weeks, said Andrew Lipow, president of Lipow Oil Associates, a Houston, Texas-based consulting firm. . .

But neither Hirs or Lipow viewed those potential savings estimates as a win for drivers or the country.

Even with nearly 90 million barrels already released from the reserve since July 2020, gas prices have only gone up, Lipow said. “Any of the SPR releases are one-time, feel-good measures to mitigate supply disruption. It does nothing to increase supply on a long-term basis and get more oil out of the ground.”

Whatever the upfront savings could be, Hirs worried what the costs could be down the line if the U.S. needed to look outside its borders to stock up on oil supply. The White House plans to push for more domestic production showed “shocking and alarming misconceptions” about what the domestic oil industry can do right now, Hirs said.

“Russia and OPEC are playing a long game. Biden’s playing a short game,” Hirs said, referring to the Organization of the Petroleum Exporting Countries.

That echoes a point from Patrick De Haan, head of petroleum analysis at GasBuddy. . .

 

[Melensdad]

Even leftist POLITICO is saying that the release of of 180 million gallons of oil from the Strategic Oil Reserve may not be effective. Funny that the left wing is not mentioning that it was Trump who actually FILLED the S.O.R. with oil, which Biden is now using.

Why Biden’s oil dump may not help

The release is the third in the past five months and would be by far the largest amount ever injected by the U.S. government into the market, amounting to about 5 percent of daily demand.

www.politico.com

 

[FrancSevin]

I was under the impression the SOR was to be used by the military to make sure our armed forces had the ability to defend the nation and/or wage war independent of the world situation. But I actually never researched the actual reason.

Yes. That was the purpose. However, this is our government which has a bad habit of developing a program that make logical sense, and then redirecting that program, and it's funding, to other means.

 

[Doc]

Gee, gas prices are still 4.24 here. Biden's actions didn't move it a smudge.

Yes. That was the purpose. However, this is our government which has a bad habit of developing a program that make logical sense, and then redirecting that program, and it's funding, to other means.

Exactly, like when congress stole billions from the SS fund back in the 80's.

 

[mla2ofus]

Gee, gas prices are still 4.24 here. Biden's actions didn't move it a smudge.


Exactly, like when congress stole billions from the SS fund back in the 80's.

There isn't one politician who can look at a big pile of $$$ and keep his/her fingers out of it. We're paying big time thieves to steal from us!!

 

[FrancSevin]

Even leftist POLITICO is saying that the release of of 180 million gallons of oil from the Strategic Oil Reserve may not be effective. Funny that the left wing is not mentioning that it was Trump who actually FILLED the S.O.R. with oil, which Biden is now using.

Why Biden’s oil dump may not help

The release is the third in the past five months and would be by far the largest amount ever injected by the U.S. government into the market, amounting to about 5 percent of daily demand.

www.politico.com

Trump claimed, falsely, that the SOR was "mostly empty."

U.S. to fill strategic oil reserve 'to the top,' Trump says

President Donald Trump said on Friday that the United States would take advantage of low oil prices and fill the nation's emergency crude oil reserve, in a move aimed to help energy producers struggling from the price plunge.

www.reuters.com

Actually it was 85% full . He did top it off with cheap crude the result of his positive approach to domestic crude production. This led to lower world prices to $31 a barrel. That put many producers in the red so his feeling was to help them and the nation at the same time.

I keep saying this, but it bears repeating. In competition, the nation that produces for export, the most of a commodity controls the price. Everyone else must raise or lower their prices to compete. When we were pumping 12 million barrels the Arabs and the Russians were hurting over the low prices.

Meanwhile the US economy was booming.


Now under Biden's watch they are using our weakness, the dependence on importing crude, against us. And likely, their neighbors.