Released January 21, 2022 | SUGAR LAND
en
Written by Geoffrey S. Lakings for Industrial Info Resources (Sugar Land, Texas)-- Hope all are well as we wind down this third week of the New Year. Hard for me to believe this first month will shortly be in the rear view.
It seems Mr. Market is buckled into his rocket ship--Sugarland Space Cowboys--here in Space City, poised for further launch to $100 oil & beyond.
Reuters: ANALYSIS-As inflation breaks records, $100 oil is also looming
"Already less transitory than forecast, central bankers' inflation headache may be about to become more acute as they face the prospect of $100-plus oil that lifts consumers' price expectations and intensifies simmering wage hike pressures. Brent crude futures, which soared 50% in 2021, are up a further 14% already in 2022 at seven-year highs of $89 a barrel. With production capacity tight, inventories low and geopolitics racking several producing regions, oil is hurtling towards $100, a level Goldman Sachs predicts will be breached by mid-year. JPMorgan predicts oil could reach $125 a barrel this year and $150 in 2023."
Speaking of geopolitics/flashpoints, both the U.S. and Europe are poised for a Russian incursion into Ukraine. New York Times explains the latest on the possibility of a Russian invasion of Ukraine.
"Russia has stationed about 100,000 troops near its border with Ukraine. Vladimir Putin's government has issued a list of demands that Western powers are highly unlikely to meet. And President Biden (says) that he expected Putin to send troops over the border. 'But I think he will pay a serious and dear price for it,' Biden added."
And, one is keeping an ever watchful eye to what is unfolding in the Middle East as Houthi rebels launched a drone strike at the United Arab Emirates' (UAE) capital with a Saudi-led coalition retaliating. Is escalation imminent?
The Hill: Saudi-led coalition targets Houthi rebels in Yemen after Abu Dhabi attack.
"More than a dozen people were killed by Saudi airstrikes on the Yemeni capital Sanaa on Monday night, in an apparent response to an attack on the capital of the United Arab Emirates by the Houthi militia earlier in the day.
The attack on Sanaa hit the home of Brig. Gen. Abdullah Qassem al-Junaid, former leader of the air force academy in Sanaa, and killed the general, along with his wife and son and five other members of the household, according to The Washington Post."
Not to mention tensions in the South China Sea--Reuters: China says it warned away U.S. warship in South China Sea, U.S. denies.
"Chinese forces followed and warned away a U.S. warship which entered waters near the Paracel Islands in the South China Sea, the country's military said on Thursday, but the U.S. Navy denied the ship had been warned off.
The Southern Theatre Command of the People's Liberation Army said the USS Benfold 'illegally' sailed into Chinese territorial waters without permission, violating the country's sovereignty, and that Chinese naval and air forces tracked the ship."
For China, similar to Russia and Ukraine, has plans for Taiwan--South China Morning Post: Taiwan war risk highest in past 25 years as US tensions rise, mainland expert warns.
"The risk of war over Taiwan is at its highest since the 1996 cross-strait missile crisis, a mainland foreign relations expert has warned.
Shi Yinhong, professor of international relations at Beijing's Renmin University, noted how tensions in the Taiwan Strait have steadily escalated amid growing U.S. support for Taiwan. Beijing sees the self-ruled island as a breakaway province and has made reunification a much more pressing goal in recent years.
This goal--which Beijing aims to achieve within a decade--could mean a massive use of force, or the threat of a massive use of force, Shi told an international relations forum in Beijing on Thursday."
So to the Moon, Mr. Market, to the Moon ...
Click on the image at right for a chart showing WTI and Brent oil prices.
-- though Mission Control reports the launch could be delayed due to inclement economic weather forecasts, for one knows from last week that the World Bank slashed global growth forecast.
CNBC: Watch ECB's Lagarde and IMF chief Georgieva discuss the global economic outlook
"The COVID 19 pandemic sent the global economy into one of its worst recessions ever. And last year saw supply bottlenecks, surging inflation and new variants weigh further on the recovery.
With that in mind, CNBC's Geoff Cutmore explores the global economic outlook for 2022 at the Davos Agenda with ECB President Christine Lagarde, Bank of Japan Governor Haruhiko Kuroda, IMF Managing Director Kristalina Georgieva, Brazilian Economy Minister Paulo Guedes and Indonesian Finance Minister Sri Mulyani Indrawati."
Not to mention Mother Nature could herself have something to say, as we already are aware of the recent Tonga volcanic eruption causing a tsunami whose impact reached the shores of Japan and California.
Science News: Intense drought or flash floods can shock the global economy
Earlier this week--IIR's Crude & Products Market Scorecard --speaks to a cautionary tale:
"Been here before. Witnessed this. Late last summer, the delta outbreak was taking form and oil prices were pressured downward, as demand was impacted by lockdowns and restrictions. The world weathered this outbreak and crude flipped around to push through $80, with pundits exclaiming, "We are going to $100 oil and beyond." Then omicron concerns arose out of South Africa, amid other concerns about more supply making its way to the market through SPR releases, U.S. production in the plays, and OPEC+. Then crude prices plummeted back below $70. But we now know that the omicron outbreak is being weathered, as it is proving to be milder. And crude has relentlessly marched back above $80, with all signs pointing to "bullish ahead," possibly going to $100 and beyond. But as we have seen before--that being a cautionary tale--be very much aware that there will be a fundamental and/or economic event which will once again pressure crude back below $80. Then in Q2 2022, crude will rebound and the world will better know a reasonable demand growth outlook & projections. At this time, crude might finally break above $90. More uncertainty and volatility lies ahead. Buckle up!"
And this brings us back stateside, where crude inventories witness their first injection since last November, while gasoline inventories continue to build--granted in a seasonal pattern--but nonetheless inquiring minds wish to know, "where is the US demand?"
Reuters: First U.S. crude stockbuild since Nov, gasoline inventories hit 11-mth high - EIA
"U.S. crude oil stockpiles rose last week for the first time since November while gasoline inventories grew to an 11-month high, the Energy Information Administration said on Thursday.
Crude inventories rose by 515,000 barrels in the week to Jan. 14 to 413.8 million barrels, compared with analysts' expectations in a Reuters poll for a 938,000-barrel drop.
"U.S. oil inventories saw the first build in eight weeks as refinery runs dropped to 15.45 million barrels per day, their lowest since mid-November, while imports rebounded strongly," said Matt Smith, lead oil analyst at Kpler."
Click on the image at right for the Weekly EIA Crude oil Status Report Analyst Survey
Click on the image at right Fundamental Analytics' comments on the EIA Weekly Petroleum Status Report.
IIR/DOE Weekly Refinery Report for the Week Ending on January 14th, 2022
Prices for West Texas Intermediate (WTI) and Brent shot up this week following a drone attack on an Abu Dhabi oil facility and heightened tensions over a potential Russian attack on or invasion of the Ukraine. WTI and Brent barrels were selling in the high-$80s Thursday morning, their highest levels in seven years. Investment houses such as Goldman Sachs and J.P. Morgan predicted prices would approach or exceed $100 per barrel this year, as the Omicron variant appears to be making less of a dent in demand at a time when supply concerns have returned to the market. China's economy grew 8.1% last year, more than expected and the highest level in a decade. High oil prices have led to increased oil-to-gas switching in Europe and Asia. In the US, inflation hit 7% in 2021, the highest in four decades, triggering concerns about a possible wage-price spiral. ExxonMobil was the latest oil supermajor to adopt a net-zero stance by 2050. US crude inventories fell 74 million barrels in 2021. Against this backdrop, and after a one-day delay due to the Martin Luther King, Jr., holiday, the DOE said US crude oil inventories increased ▲ 515,000 barrels to 413.8 million barrels for the week ended January 14.
A cautionary tale indeed as Mr. Market has his sight set on the moon, for China is poised from their SPR ahead of the Lunar New Year (Seeking Alpha)--granted the market but shrugged on this news--while U.S. Permian production is rebounding.
Reuters: Permian oil output forecast to hit record high in February-EIA
"The largest U.S. shale basin's output will surge to a record in February, according to a monthly forecast from the U.S. Energy Information Administration (EIA) on Tuesday.
The largest U.S. crude basin, the Permian basin of Texas and New Mexico, is expected to have an output increase of 80,000 barrels per day (bpd) to 5.076 million bpd, the EIA said.
Overall, crude output from U.S. major shale formations will rise by about 105,000 bpd to 8.54 million in February, the highest since March 2020, according to the EIA forecast."
Geoffrey S. Lakings is the chief strategist at IIR Energy.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
It seems Mr. Market is buckled into his rocket ship--Sugarland Space Cowboys--here in Space City, poised for further launch to $100 oil & beyond.
Reuters: ANALYSIS-As inflation breaks records, $100 oil is also looming
"Already less transitory than forecast, central bankers' inflation headache may be about to become more acute as they face the prospect of $100-plus oil that lifts consumers' price expectations and intensifies simmering wage hike pressures. Brent crude futures, which soared 50% in 2021, are up a further 14% already in 2022 at seven-year highs of $89 a barrel. With production capacity tight, inventories low and geopolitics racking several producing regions, oil is hurtling towards $100, a level Goldman Sachs predicts will be breached by mid-year. JPMorgan predicts oil could reach $125 a barrel this year and $150 in 2023."
Speaking of geopolitics/flashpoints, both the U.S. and Europe are poised for a Russian incursion into Ukraine. New York Times explains the latest on the possibility of a Russian invasion of Ukraine.
"Russia has stationed about 100,000 troops near its border with Ukraine. Vladimir Putin's government has issued a list of demands that Western powers are highly unlikely to meet. And President Biden (says) that he expected Putin to send troops over the border. 'But I think he will pay a serious and dear price for it,' Biden added."
And, one is keeping an ever watchful eye to what is unfolding in the Middle East as Houthi rebels launched a drone strike at the United Arab Emirates' (UAE) capital with a Saudi-led coalition retaliating. Is escalation imminent?
The Hill: Saudi-led coalition targets Houthi rebels in Yemen after Abu Dhabi attack.
"More than a dozen people were killed by Saudi airstrikes on the Yemeni capital Sanaa on Monday night, in an apparent response to an attack on the capital of the United Arab Emirates by the Houthi militia earlier in the day.
The attack on Sanaa hit the home of Brig. Gen. Abdullah Qassem al-Junaid, former leader of the air force academy in Sanaa, and killed the general, along with his wife and son and five other members of the household, according to The Washington Post."
Not to mention tensions in the South China Sea--Reuters: China says it warned away U.S. warship in South China Sea, U.S. denies.
"Chinese forces followed and warned away a U.S. warship which entered waters near the Paracel Islands in the South China Sea, the country's military said on Thursday, but the U.S. Navy denied the ship had been warned off.
The Southern Theatre Command of the People's Liberation Army said the USS Benfold 'illegally' sailed into Chinese territorial waters without permission, violating the country's sovereignty, and that Chinese naval and air forces tracked the ship."
For China, similar to Russia and Ukraine, has plans for Taiwan--South China Morning Post: Taiwan war risk highest in past 25 years as US tensions rise, mainland expert warns.
"The risk of war over Taiwan is at its highest since the 1996 cross-strait missile crisis, a mainland foreign relations expert has warned.
Shi Yinhong, professor of international relations at Beijing's Renmin University, noted how tensions in the Taiwan Strait have steadily escalated amid growing U.S. support for Taiwan. Beijing sees the self-ruled island as a breakaway province and has made reunification a much more pressing goal in recent years.
This goal--which Beijing aims to achieve within a decade--could mean a massive use of force, or the threat of a massive use of force, Shi told an international relations forum in Beijing on Thursday."
So to the Moon, Mr. Market, to the Moon ...
-- though Mission Control reports the launch could be delayed due to inclement economic weather forecasts, for one knows from last week that the World Bank slashed global growth forecast.
CNBC: Watch ECB's Lagarde and IMF chief Georgieva discuss the global economic outlook
"The COVID 19 pandemic sent the global economy into one of its worst recessions ever. And last year saw supply bottlenecks, surging inflation and new variants weigh further on the recovery.
With that in mind, CNBC's Geoff Cutmore explores the global economic outlook for 2022 at the Davos Agenda with ECB President Christine Lagarde, Bank of Japan Governor Haruhiko Kuroda, IMF Managing Director Kristalina Georgieva, Brazilian Economy Minister Paulo Guedes and Indonesian Finance Minister Sri Mulyani Indrawati."
Not to mention Mother Nature could herself have something to say, as we already are aware of the recent Tonga volcanic eruption causing a tsunami whose impact reached the shores of Japan and California.
Science News: Intense drought or flash floods can shock the global economy
Earlier this week--IIR's Crude & Products Market Scorecard --speaks to a cautionary tale:
"Been here before. Witnessed this. Late last summer, the delta outbreak was taking form and oil prices were pressured downward, as demand was impacted by lockdowns and restrictions. The world weathered this outbreak and crude flipped around to push through $80, with pundits exclaiming, "We are going to $100 oil and beyond." Then omicron concerns arose out of South Africa, amid other concerns about more supply making its way to the market through SPR releases, U.S. production in the plays, and OPEC+. Then crude prices plummeted back below $70. But we now know that the omicron outbreak is being weathered, as it is proving to be milder. And crude has relentlessly marched back above $80, with all signs pointing to "bullish ahead," possibly going to $100 and beyond. But as we have seen before--that being a cautionary tale--be very much aware that there will be a fundamental and/or economic event which will once again pressure crude back below $80. Then in Q2 2022, crude will rebound and the world will better know a reasonable demand growth outlook & projections. At this time, crude might finally break above $90. More uncertainty and volatility lies ahead. Buckle up!"
And this brings us back stateside, where crude inventories witness their first injection since last November, while gasoline inventories continue to build--granted in a seasonal pattern--but nonetheless inquiring minds wish to know, "where is the US demand?"
Reuters: First U.S. crude stockbuild since Nov, gasoline inventories hit 11-mth high - EIA
"U.S. crude oil stockpiles rose last week for the first time since November while gasoline inventories grew to an 11-month high, the Energy Information Administration said on Thursday.
Crude inventories rose by 515,000 barrels in the week to Jan. 14 to 413.8 million barrels, compared with analysts' expectations in a Reuters poll for a 938,000-barrel drop.
"U.S. oil inventories saw the first build in eight weeks as refinery runs dropped to 15.45 million barrels per day, their lowest since mid-November, while imports rebounded strongly," said Matt Smith, lead oil analyst at Kpler."
IIR/DOE Weekly Refinery Report for the Week Ending on January 14th, 2022
Prices for West Texas Intermediate (WTI) and Brent shot up this week following a drone attack on an Abu Dhabi oil facility and heightened tensions over a potential Russian attack on or invasion of the Ukraine. WTI and Brent barrels were selling in the high-$80s Thursday morning, their highest levels in seven years. Investment houses such as Goldman Sachs and J.P. Morgan predicted prices would approach or exceed $100 per barrel this year, as the Omicron variant appears to be making less of a dent in demand at a time when supply concerns have returned to the market. China's economy grew 8.1% last year, more than expected and the highest level in a decade. High oil prices have led to increased oil-to-gas switching in Europe and Asia. In the US, inflation hit 7% in 2021, the highest in four decades, triggering concerns about a possible wage-price spiral. ExxonMobil was the latest oil supermajor to adopt a net-zero stance by 2050. US crude inventories fell 74 million barrels in 2021. Against this backdrop, and after a one-day delay due to the Martin Luther King, Jr., holiday, the DOE said US crude oil inventories increased ▲ 515,000 barrels to 413.8 million barrels for the week ended January 14.
A cautionary tale indeed as Mr. Market has his sight set on the moon, for China is poised from their SPR ahead of the Lunar New Year (Seeking Alpha)--granted the market but shrugged on this news--while U.S. Permian production is rebounding.
Reuters: Permian oil output forecast to hit record high in February-EIA
"The largest U.S. shale basin's output will surge to a record in February, according to a monthly forecast from the U.S. Energy Information Administration (EIA) on Tuesday.
The largest U.S. crude basin, the Permian basin of Texas and New Mexico, is expected to have an output increase of 80,000 barrels per day (bpd) to 5.076 million bpd, the EIA said.
Overall, crude output from U.S. major shale formations will rise by about 105,000 bpd to 8.54 million in February, the highest since March 2020, according to the EIA forecast."
Geoffrey S. Lakings is the chief strategist at IIR Energy.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
