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El_Pirata

Another Oil Rally Is On The Way

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Hello folks, a little update from the world of oil:

The markets have started to realise that Rita was not as harmless as first thought - there is still a huge chunk of US refining capacity down and much of it with only a restart date. US oil products prices are seriously soaring, so much so that traders are starting to send heating oil and diesel from Europe to the US - and these are products we normally have to import ourselves.

Now add this to the mix - workers at France's largest refinery, Gonfreville, are on strike and the strike could spread to all of Total's 5 French refineries by the end of the first week of Oct. And port workers in south of France are blockading the largest oil import terminal. Diesel traders are VERY bullish about October. Looks like an autumn of discontent brewing in the labour movement in France.

I am now expecting us to go well into the 70s on US crude futures in October. There are some serious issues dogging the market that are not going to go away quickly and it is very vulnerable to spiking.

Relevance to HPC: higher oil feeds through to inflation=higher interest rates=HPC

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Hello folks, a little update from the world of oil:

The markets have started to realise that Rita was not as harmless as first thought - there is still a huge chunk of US refining capacity down and much of it with only a restart date. US oil products prices are seriously soaring, so much so that traders are starting to send heating oil and diesel from Europe to the US - and these are products we normally have to import ourselves.

Now add this to the mix - workers at France's largest refinery, Gonfreville, are on strike and the strike could spread to all of Total's 5 French refineries by the end of the first week of Oct. And port workers in south of France are blockading the largest oil import terminal. Diesel traders are VERY bullish about October. Looks like an autumn of discontent brewing in the labour movement in France.

I am now expecting us to go well into the 70s on US crude futures in October. There are some serious issues dogging the market that are not going to go away quickly and it is very vulnerable to spiking.

Relevance to HPC: higher oil feeds through to inflation=higher interest rates=HPC

"...there is still a huge chunk of US refining capacity down..."

i'm confused.

refiing capacity deflates crude prices (creates a bit of a glut) but increases finished fuel prices.

i don't understand!

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"...there is still a huge chunk of US refining capacity down..."

i'm confused.

refiing capacity deflates crude prices (creates a bit of a glut) but increases finished fuel prices.

i don't understand!

We've had this debate several times on here. What you say is completely logical and in accordance with the laws of supply and demand, however...the oil market just doesn't work that way! The spread between crude and product prices (ie the refining margin) has been and will get wider, but the strength of products will also pull crude prices higher. Basically a lot of the national producers in places like Nigeria and Saudi see that refiners are making a killing and make them pay more, and that feeds through to the price of crude in general.

Anyway for our HPC purposes, it is the price of products that matters as that is what will cause inflation.

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Katrina knocked out the refining capacity, and Rita knocked out a bit more. What is not widely appreciated is that Rita had a far bigger effect on the oil production rigs in the gulf. It may have been downgraded to a cat 3 hurricane by the time it reached shore, but it was a real cat 4 when it was out over the water.

From a current Bloomberg story - http://www.bloomberg.com/apps/news?pid=ema...id=aYEzYnzPC1pw

Hurricane damage to offshore platforms in the Gulf is also boosting prices of crude oil and natural gas. U.S. oil output in the Gulf, the source of about 30 percent of the nation's production, was completely shut for a fifth straight day yesterday, according to the Minerals Management Service. Gas output was 80 percent lower than normal.

``Markets are becoming increasingly uneasy about the state of affairs, and are realizing that things in the Gulf are far messier than the initial assessments suggested,'' Edward Meir, a commodity analyst at Man Financial Ltd. in Darien, Connecticut, said in an e-mailed note.

As many as 40 platforms and 18 rigs in the Gulf may be missing or damaged, the MMS reported yesterday.

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We've had this debate several times on here. What you say is completely logical and in accordance with the laws of supply and demand, however...the oil market just doesn't work that way! The spread between crude and product prices (ie the refining margin) has been and will get wider, but the strength of products will also pull crude prices higher. Basically a lot of the national producers in places like Nigeria and Saudi see that refiners are making a killing and make them pay more, and that feeds through to the price of crude in general.

Anyway for our HPC purposes, it is the price of products that matters as that is what will cause inflation.

Short term crude prices shoud fall (as we saw) but after that the Offical Selling Price of various countries forces up the price of crude and that's on the way now. High refining margins tend not to last too long, shortage of refineries or not.

I maintain that natural gas in the US is potentially a truly massive problem. Amongst other things it will feed through to higher diesel demand for industry and power generation. And fuel oil, kerosene...

There must be some serious drawdowns of product stocks going on given the loss of so much production. Just wait until the markets wake up to this!

Edited by Smurf1976

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The oil price has gone crazy lately with one thing after another. In the USA most of the homes in the northern states use oil-fired heating, unlike the UK where it is predominately gas-fired. With winter just around the corner and heating bills set to be up 70%+ I think the USA is going to see consumer spending hit the doldrums for Christmas and Bush's much-relied-on high-spending consumer is going to let him down.

Huge stockipiles of unsold cars....

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There must be some serious drawdowns of product stocks going on given the loss of so much production. Just wait until the markets wake up to this!

Yep the markets are waking up to this, and are also starting to distrust official US stocks figures. Look at yesterday - 4.4 million barrel gain in gasoline stocks shown in US data, but gasoline futures rise.

I'm getting some European stock data today, should be interesting, but not as interesting as next week's which I predict will show a huge draw in diesel/heating oil.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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