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Despite main market setbacks this week, OP (Brent specifically) has not given up on its upward push. Pick a colour: red, green or blue: https://invst.ly/utdse
Interesting that red - a seven year ceiling - is experiencing the most pressure and taking the most punches - conventionally that would be the one most likely to give way. But nothing in this market is certain except that at least one of the three must give way.
Wider view: https://invst.ly/utdvm
Brent futures currently $69.45 which is a pretty good proposition for RDS upstream and LNG operations
Shares go ex div tomorrow I believe
Just mulling some addition but waiting to see if US market stabilises after Nasdaq recovered yesterday but Dow retreated from record high
Great minds
Yes, WTI.
As I write this crude oil has recovered back to 65.34 ....
That's WTI presumably? So about $3 below Brent currently.
As I write this crude oil has recovered back to 65.34 and the Nasdaq is a mere 0.12% down on the day.
Glad I bought some more Shell and SMT on the dip!
14:01, good post re FX influence.
Thanks for everyones thoughts on what the oil price might or might not do in the near term.
It sort of reads like nobody knows and anything is possible.
Although I suspect IF the price of oil does start to climb towards $80 certain countries would ask OPEC (& OPEC+) to pump more....and certain members of OPEC+ would be happy to oblige.
IMO the OP isn't as simple as saying rising demand equates to rising price of oil. There is over supply - especially IF shale producers are still operating. Plus there is a cartel that can, to some extent regulate supply, and that organisation is subject to outside political pressure.
So I may want $80pb but I doubt people in Bejing or on Capitol Hill want the same thing. So 'perhaps' a 'happy' compromise would be to keep oil at $65pb ....but no more. But what the hell do I know, I ain't no expert!!
$80 oil is fine...but..depends what the dollar falls to....that is part of the reason you are getting the higher dollar price on the screen
and it will depend on the fight for market share . .Russians want more market share ...as do OPEC members
$60 and steady growth in the economies might be better than ....80$ plus all the other commodity price rises ...causing economic any recovery to stall
Higher gasoline prices in the US may not be the best thing right now....
What effect is the pipeline cyber attack shutdown having on Shell refiners over there ?
So do you think the oil price will increase towards $80pb - from circa $65 currently - when/if demand rises?
Do I think increased demand normally leads to increased prices? Yes.
Do I think demand is likely to increase? Yes.
I think $80 is possible and the chart - bearing in mind that they are indicative not predictive - shows that the price has been challenging a seven year limiting line at a seasonally good time for demand as we head towards summer in the northern hemisphere and as travel etc picks up. OPEC+ has seen the fruits of its control over supply and the question for them now is the diminishing return of pumping more and consequently holding the price back. So far the shale producers have been reluctant to enter the fray and seriously ramp back up: maybe they have learned the lesson that pumping more (at quite high cost) only to see the price drop sharply is not a smart move. In the end, if you can make the same profit from lower production levels it's a no brainer - why spend cash on pumping and depleting your finite resources when there's no benefit? Previously they had little choice - they had debts to service. Now many of those have gone bust or 'restructured'. Chasing market share in a falling market can be the road to ruin, hence the repeated boom and bust cycles in the US Shale industry and the dissatisfaction of investors in it. Those investors want to see capital discipline and some returns for once.
So, I think $80 is a more likely prospect now than it has been since October 2018 but I'll be perfectly happy if OP remains above $65 - which has been something of a 'sweet spot' in terms of supply/demand balance since the frackers disrupted the market.
I don’t think any of us are experts bald eagle but never the less all have our opinions.
Mine is that oil will rise from here to 80$...Why.?
Firstly I can’t see as negative issues in front of us assuming the world cracks COVID.
Then you have millions with cabin fever, Sleepy Joes stimulus and the OPEC+ truce. I also think Shale is different as it owned much more centrally now by fewer players, are finding it harder and more expensive to raise capitol. Shareholders are also demanding dividends instead of more debt and of course many many companies have got bankrupt and if not have had severe nose bleeds. They won’t want that again. Look at BP, they have a massive area but only a few rigs and no intention of increasing them.
Finally there is massive investment in oil and gas during the last 5 years. If your not exploring and developing oil fields your going backwards.
None of this includes our Shiney green renewable world which I also think will push oil up short term as there is less and less companies after the oil....
Who knows.....?
"I assume you are joking."
================================
No
Boyobach, I didn't mean to say it would necessarily fall just that it is more likely to be nearer $50pb than $80pb when/if demand increases. As I say I am no expert.
So do you think the oil price will increase towards $80pb - from circa $65 currently - when/if demand rises?
The ability of shale producers to start pumping is a big unknown for me...hence why I keep saying I am no expert. Similarly the fragility of OPEC+ agreements (also unknown to me).
$80pb would be great for Shell....I might even increase my holding % if it is 'on the cards'!
Bald Eagle: For it is more likely (in my non expert eyes) for oil to be nearer $50pb when demand increases ......
I assume you are joking.
Convention and reality has it that the price of anything will increase when demand for it is high and stretches supply.
To re-cap: I was simply demonstrating the link between OP, level of demand and sp .
And, no, if demand increases from current levels I would not expect OP to fall as a consequence
"RDS obviously benefits from higher OP and higher demand rather than low OP and low demand."
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Boyobach, oh...you were being rhetorical?!
Obviously high demand at $80pb is 'better' for Shell than low demand at $50pb....is there even a question there?
More interesting (at least to me) is the question "Is healthy demand at $50/bbl likely to be better for RDS than poor demand at $80/bbl?" ......I would imagine so.
For it is more likely (in my non expert eyes) for oil to be nearer $50pb when demand increases than it rising to $80pb....but it would be great for Shell if it did reach $80.
The other way round, surely?!
Er... no. ....We must have some crossed wires here somewhere Bald Eagle: RDS obviously benefits from higher OP and higher demand rather than low OP and low demand.
"Is healthy demand at $80/bbl likely to be better for RDS than poor demand at $50/bbl? I would imagine so."
===========================
??
The other way round, surely?!
The level of demand is obviously also a factor.
Is healthy demand at $80/bbl likely to be better for RDS than poor demand at $50/bbl? I would imagine so.
https://invst.ly/uq-7g.
I think it has been suggested before that there doesn't seem to be much link between the oil price (OP) and Shell's SP. So perhaps the market doesn't believe the current OP is representative of what it will be in the near future.
IF OP stays above $60 AND demand increases then Shell profits will jump and SP will look cheap....surely?!
Over a seven year view, the price of Brent, is certainly at an interesting point right now:
https://invst.ly/uqv8p
Especially if we consider what the low limit might have been if 2020 had been ‘normal’ - the blue line.
The dynamics between OPEC+ control of supply and the US Shale producers’ tendency to fill the demand, thus putting a ceiling on the price, have, for the moment at least, been changed and there seems to be a chance for OP to break above the red line for the first time in those seven years. One thing is certain: the three lines can’t all survive the next few months.