THE OIL PRODUCING COUNTRIES AND CARTLE MEMEBERS GAVE THIS ANSWER: BIG NO ,,PUNCH,, to the Europeans and non-producing oil countries who want to dictate them the Oil Price.
It is a era of the colonilistic countries like Germany, GB, Belgium, Italy, France, Scandinavian and others is over. It is simply over.
They are losing everywhere their financial-, economic-, and diplomatic powers.
You have Oil? You dictate the price. It is as simple like that.
Oil will climb back to $115 a barrel and a great way to play that rebound is Chevron Corporation (NYSE: CVX), says Rob Thummel. He’s a Managing Director at TortoiseEcofin.
OPEC approves only a tiny increase in output
His outlook is essentially based on the inability of OPEC+ to “meaningfully” increase its output and meet the continued surge in global demand. This afternoon on CNBC’s “Power Lunch”, Thummel said:
We’ll see demand rise as China comes back online and people continue to fly. That will result in an undersupplied oil market. And what we know is that when inventories go lower, prices go higher.
He’s convinced the global demand for conventional energy can withstand a mild recession, especially as the impact of Russian sanctions materialise in the coming fall.
Despite the energy news on Wednesday, WTI Crude is at $91 a barrel at the time of writing.
Thummel explains why he likes Chevron stock
Thummel likes Chevron stock down more than 10% from its year-to-date high for the dividend yield that currently sits between 3.0% and 4.0%. He’s also constructive on “CVX” for its continued investments in renewable energy.
It has double the S&P 500 dividend yield. But more importantly, it’s providing more energy and less carbon. It’s made significant investments in renewable fuels. So, the changing supply source of energy could be a benefit to Chevron going forward.
Last week, Chevron reported record profit for its fiscal second quarter on higher prices and said it will buyback up to $15 billion worth of its stock in 2022.
Wall Street currently has a consensus “overweight” rating on the stock with upside to $179 on average, or about a 15% increase from here.
Oil prices rebound on supply concerns after drop to near 6-month low
We will see much more higher Prices in BCO and WTI: My estimation is between 185-250 in BCO and WTI. In Minimum.
During the much-awaited OPEC+ meeting, member countries led by Saudi Arabia and Russia agreed to increase their collective output target by 100,00 bpd (barrels per day) come September. This is a drop in the proverbial ocean with producers catering to a global market of approximately 10 million bpd.
Although a small or even no increase at all was in line with market expectations, analysts were surprised by the less-than-token improvement in the output ceiling, prompting some to interpret this as a deliberate attempt to humiliate the US.
For instance, Robert Yawger, executive director of energy futures at Mizuho Securities, stated that this “is a slap to the face for President Biden.”
This outcome would have been very disappointing for the President who made a special trip to meet with Saudi authorities last month.
To add salt to injury, the OPEC+ decision comes a day after the US cleared $5.3 billion in missile sales to both the UAE and Saudi Arabia.
Prices slide
Prices were steady after the OPEC+ announcement, with Brent trading slightly above $100.
However, with the publication of Energy Information Administration (EIA) data, prices have crashed by over 3%, with Brent trading at $97.3 and WTI as low as $91.2, at the time of writing.
The EIA reported an unexpectedly large build in US oil inventories which rose by 4.5 million barrels for the week to July 29. Gasoline stocks were also up 200,000 barrels in the week ending July 29th, potentially reflecting a moderation in consumer demand as the US exits the driving season.
As per market surveys, both these figures were expecting a drawdown, in line with the previous week, but stocks have surprised to the upside raising concerns of demand sustainability.
American conundrum
The US is tussling with four-decade high inflation rates and gasoline prices in excess of $5 across several major cities. The administration is desperate to ease the market tightness and bring down costs.
An argument could be made that any increase at all would be deemed to be symbolic since the OPEC+ countries have long been struggling to meet their quotas in any case.
With the onset of the pandemic in 2020, followed by a sudden drop in aggregate demand, laying-off of skilled labour, disrupted supply chains and chronic underinvestment in these countries, OPEC+ members simply do not have sufficient spare capacity to meaningfully increase global output.
The only two countries that may have the ability to increase production sizably are Saudi Arabia and the UAE. For Saudi Arabia, this would be a challenging task due to many of the same reasons listed above, in addition to which, most untapped reserves are in “untested fields” and would take months to operationalize.
Moreover, Saudi hydrocarbon law requires that any official increase in production targets be met for a minimum of at least 1 year. The Kingdom is unlikely to want to boost supplies significantly for such a lengthy period, as a deep recession is widely expected. Ramping up production would only lead to cutting off windfall profits that member countries are presently enjoying.
Lastly, the Saudi government would be unwilling to cross its Russian ally by hiking production targets too fast. Given the strict sanctions that the West has imposed on Putin’s Moscow, Russian export channels have dried up and a tight global oil market is supportive of Russian revenues for the time being