Crude Oil drops below $100

[Ultegra134]

I have a bad feeling about all this. By the first week of November, the selloff from SPR is going to stop and crude will be back to >$120 levels (or much higher than that). The only factor this is pulling down the price is the massive selloff by the American administration from their SPR. They don't have any reason to continue with it, once voting closes on 8th November. And even worse, the Americans may try to refill the SPR which should be almost empty by then. I won't be surprised if the crude oil prices cross $150 per barrel level.

I felt I needed to take a look at it after reading your post. I was aware Biden's Administration was releaing a significant percentage of those reserves, but then I realized it was way more than I thought it was.

Source: https://www.eia.gov

According to that graph, the Strategic Petroleum Reserves of USA are at the levels of 1986!
So the scenario you explained may be indeed possible depending on how fast the government wants to replenish their SPR and whether they plan to do it with foreign or national production.

This seems to be quite a political move looking foward to November rather than part of a long term plan to relieve common citizens from high energy prices...

Interesting insight from both of you, didn't actually know that USA is selling their crude oil reserves, a move that will only temporarily relieve the market. I'd like to see how this progresses in the upcoming months. Unfortunately, I was also expecting that this could only be a non-permanent drop in oil prices, since Russian oil imports are yet to be replaced, while the war isn't stopping anytime soon.

[be.open]

Interesting insight from both of you, didn't actually know that USA is selling their crude oil reserves, a move that will only temporarily relieve the market. I'd like to see how this progresses in the upcoming months. Unfortunately, I was also expecting that this could only be a non-permanent drop in oil prices, since Russian oil imports are yet to be replaced, while the war isn't stopping anytime soon.

Your understanding will become deeper and more complete if you carefully consider the idea that Biden does not really need cheap oil and cheap gasoline. Expensive oil makes shale mining profitable in the United States, and expensive gasoline makes the transition to electric cars more attractive in the eyes of Americans (which directly fits into the democratic green agenda).

[TheNineClub]

Oil prices in general will be volatile for the next year or so. The war, in general, has defected it, but also Europe urgency to move towards renewable green energy will leave the oil prices will be all over the place. Especially since there is a strong incentive to be less gas dependent, and that switch takes time, it might be some time before we see oil stable.

[DrBeer]

August 5, 2022:
Brent - 94.2
WTI - 88.4
Urals - 90.68

And you can hysteria as much as you like that "this is all temporary, without Russian oil everyone will die" And ahead is the EU's rejection of terrorists' oil, the EU's rejection of terrorists' gas is still ahead. It's funny to listen to hysterical fantasies, those who, by self-hypnosis, prove the greatness of the miserable old terrorist

[2stout]

Crude oil prices are always cyclic so no surprise here, won't be surprised to see them drop even lower.  However, I believe the sustainability on price drop and subsequent stabilization will be more known by winter.

[stompix]

August 5, 2022:
Brent - 94.2
WTI - 88.4
Urals - 90.68

I don't know where you've got that data but don't give them false hopes...
https://www.investing.com/commodities/crude-oil-urals-spot-futures
Ural spot is at 72.18 after taking a tumble to 68.88 so Putin, the Masterchesschef has managed to create a situation where he is forced to sell oil at prices equal to 2018 and 2019 levels, but that is only on paper since for any actual takes they have to give 10-20$ in discount for the risk , so he is basically selling the oil lower thna the fiscal breakeven point and closer to actual extraction breakeven for arctic offshore oil.

But wait for the expert in economics to tell us how oil will reach 30000$ per barrel cause Russia is stonk!
Funny how the EU hs managed to not only avoid recession but post linear growth for Q1 and Q2, record employment levels while the inflation is only 0.3% for the last month. Must be some kind of himars effect!

[virasisog]

Crude oil prices are always cyclic so no surprise here, won't be surprised to see them drop even lower.  However, I believe the sustainability of price drop and subsequent stabilization will be more known by winter.

I think it will not drop lower anymore. There was a price drop in our country as well but the sad part is there was no price drop in the prices of main essential goods. Business owners have already taken advantage of it. Instead of dropping the prices, they're even increasing it continuously so we could really feel the struggle of the inflation crisis.

[Gozie51]

Crude oil prices are always cyclic so no surprise here, won't be surprised to see them drop even lower.  However, I believe the sustainability of price drop and subsequent stabilization will be more known by winter.

I think it will not drop lower anymore. There was a price drop in our country as well but the sad part is there was no price drop in the prices of main essential goods. Business owners have already taken advantage of it. Instead of dropping the prices, they're even increasing it continuously so we could really feel the struggle of the inflation crisis.

The drop really is not reflecting in prices of goes and services and this is unfortunate. If there is reduced price in crude oil, it has not had better influence in the market. Products are in the increase, pump price of oil is yet not adjusted especially for countries that are not manufacturing or technological. The OPEC countries are only regulating global oil production.

[Wakate]

Oil prices in general will be volatile for the next year or so. The war, in general, has defected it, but also Europe urgency to move towards renewable green energy will leave the oil prices will be all over the place. Especially since there is a strong incentive to be less gas dependent, and that switch takes time, it might be some time before we see oil stable.

Things are really going sour and we don't have any option than to move along. The inflation is really having so much effect on food stuffs and other households necessity in my region. The price of gas is going high everyday and there is nothing we can do than to strive and meet up with bills accumulating everyday. The price is gases had increases including cooking gas making food to become more expensive than usual. We keep moving along this hard time that things are becoming expensive everyday.

[Hispo]

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since Russian oil imports are yet to be replaced...

USA and Europe are working on it, for example, here in Venezuela there have been movements these last months to ease some sanctions which would allow us to export Oil to Europe, however, our production is so low at the time being that we are not a reliable option at the moment, not without foreign capital pouring in.

[adaseb]

Remember what happened last time when oil was headed downwards? During 2008? Was the start of the recession. Back then we had good employment numbers like today and very quickly it went downhill. So maybe this is a signal its the start of the next crash.

We got CPI numbers out next week and most likely they are hinting at 8.7%. Its hard to say what it will be. I can see the lower gas prices having an effect however will it be enough to lower inflation? That is hard to predict. Everything is still expensive everywhere. Shortage of workers and hourly wages are up. Also GDP is negative. So things are not looking too bright at the moment.

[NotATether]

There's a common saying when it comes to gas prices, the price goes up like a rocket and floats slowly down like a feather. There is actually a strong correlation between oil prices hitting record highs and a recession following shortly after, but there is a lot going on around the world right now so it's hard to gauge what will happen.

The correlation between oil prices and recessions is broken here, because of the oil prices falling down.

That is to say, we are still in a recession, but it's oil supply/demand that's acting crazy right now.

[Vishnu.Reang]

~~~
According to that graph, the Strategic Petroleum Reserves of USA are at the levels of 1986!
So the scenario you explained may be indeed possible depending on how fast the government wants to replenish their SPR and whether they plan to do it with foreign or national production.

This seems to be quite a political move looking foward to November rather than part of a long term plan to relieve common citizens from high energy prices...

From what I heard, the reserves are down to 400 million barrels. By the time of mid-term elections, their reserves will be almost empty. But then they need to refill these reserves at some point. That is going to be problematic. Because by then the purchase price will be much higher than the price at which they are selling now. And the ground situation hasn't changed much within the United States. Democrats are still trailing the GOP in many of the key races, and hypothetical polls show Biden trailing Trump by 3-4 points.

[$anounimus$]

I think it's just one more data point suggesting that we may be in for some pretty turbulent times down the road. However, it's also important to keep things in perspective and realize that dropping oil prices are great news for American consumers. Whether or not those savings end up being passed on to consumers ultimately depends on the power of competition among gas stations—but this is a topic for another day.

[Hispo]

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...By the time of mid-term elections, their reserves will be almost empty.

In my opinion, it would be kind of a reckless decision to allow those strategic reserves to go that low, specially during these times of energy uncertain, unless Biden's administration is planning to step up national drilling and straction widely in order to refill those reserves,  since we all know how the international prices would react if USA decided to import all that oil to replenish...

I wonder if the Green Energy plan for USA has anything to do with these choices, as I said, all this sounds more political than economical.

[DrBeer]

And oil kept falling and falling in price!
What is surprising, just "entertaining analytics": the lower the price of oil, the quieter the voices of Russian propaganda that "without oil and gas from Russia, everyone will freeze, their economies will collapse, and only we will prosper!"

In addition to the fact that the price of oil is falling, there is nowhere to put it - and you have to sell at the cost level .... So that's not all - since July 2022, you have to stupidly burn gas, heating the air on an industrial scale! This is me about the "greatest country in the world" (well, that's how they modestly call themselves )

[STT]

Oil and commodities generally are going to keep outperforming but that doesnt mean it does so in the next rolling year exactly just overall I think we see higher return from oil or similar energy demand then plain currency will return.  Certainly in this decade, since I have to pay for energy I dont see a good reason not to be involved;  others might like to invest in solar panels and remove themselves from reliance on the world market some.    Last I saw sentiment has become overly bearish on Oil hence we could have a short term low and a rise back to 110 or so before larger moves come in to alter that into year end.

[LastKiss]

~snip~
Have you seen any significant drop in gas prices in your area? Will oil drop even further, despite the ongoing war?

Well, absolutely not my government just allowed the oil company to increase their product prices and they did that yesterday  . Maybe since the company bought their crude when the price is higher than 100$ so they will use that price as they decide the product prices in a few months.

[Lubang Bawah]

This is unique when a conflict occurs but the price of tuuru oil is below $ 100, hopefully this can reduce the burden of inflation that occurs a lot in the country and make the economy recover soon, the presence of electric vehicles can certainly be a good solution to reduce oil consumption so that oil needs are not too significant.

[TimeTeller]

This is unique when a conflict occurs but the price of tuuru oil is below $ 100, hopefully this can reduce the burden of inflation that occurs a lot in the country and make the economy recover soon, the presence of electric vehicles can certainly be a good solution to reduce oil consumption so that oil needs are not too significant.

I have seen the rollback in fuel in my area, which is a good thing to all vehicle owners as well as commuters.
In my area alone, the use of electric bicycles are becoming rampant also, which I believe is a good thing.
No pollution coming out from bicycles and pretty cheap even if you charge it as compared to the per liter of gasoline consumption.
We need to find alternatives also so as not to rely from the crude oil coming from Russia.