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EIA: US crude oil output to fall 260k bpd this year vs 200k bpd prior estimate

EIA sees a larger fall in US output

  • EIA sees crude output at 11.02m bpd this year
  • Sees output at 11.73m bpd next year
The drop in estimated production is almost completely covered next year. I would be surprised to see that much production growth in the US given the draw on DUCs and the lack of drilling.
Meanwhile, the White House said its speaking with US oil and gas producers on how the industry can help bring down prices, according to a report.
Add this to the inflationary debate as well:
Compared with last winter’s heating costs, EIA forecasts U.S. households will spend 54% more for propane, 43% more for heating oil, 30% more for natural gas, and 6% more for electric heating. U.S. households will spend even more if the weather is colder than expected.

They also note that the National Oceanic and Atmospheric Administration expects a slightly colder winter this year than last year

WTI crude oil hits $80 for the first time since 2014

WTI blasts through $80

WTI blasts through $80
The monthly chart of crude is shown above and I think it clearly illustrates how much room there is to run on this breakout, which came after four months of consolidation. The break also came right after the latest OPEC+ meeting, which offers some fundamental support along with gas-to-oil switching, which is in full swing right now. In fact, we might even see some coal-to-oil switching with inventories in India and elsewhere at unbelievably low levels.
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Oil slumps further after the surge in energy prices cools

A setback for oil at least in the short-term

WTI crude is now down over 2% to $75.50 levels while Brent is also marked down to just below $80 on the day, as the retreat from yesterday continues.
The retreat in energy prices is playing some part in all of this as the hype cools off but in the case of WTI, it comes as price came close to testing the key $80 mark this week. The high hit $79.76 before things started turning around in favour of sellers.
Right now, the shove lower even sees buyers lose near-term control on a drop below the key hourly moving averages @ $77.04 and $76.04 respectively. The weekly chart has a gnarly-looking candle forming as well so that’s something to be wary of:
 
WTI
We’re also seeing price fall back below key resistance @ $76.88-96 so that is knocking some wind off the sails of buyers in the short-term at least.
A tighter market going into next year may keep prices underpinned but for now, perhaps we have seen a short-term high posted before the next catalyst comes along.

WTI crude tops $79 for the first time since 2014. What’s next

The oil chart looks better and better

The oil chart looks better and better
Whenever there’s a major breakout like we saw in oil yesterday, there’s always a chance of a false breakout.
One positive sign though was that it came on a newsy day with the OPEC meeting providing somewhat of a catalyst. Today’s price action is another good sign as crude hasn’t just consolidated the move to a new range, it’s extended it.
WTI just touched $79 fro the first time since 2014 and is up 1.75% on the day. I would note that this rally is also coming at what’s usually a poor seasonal time of year for oil.

OPEC and its allies meet on Monday. 400K bbl/day to be added to output, but could be more.

OPEC+ is The Organization of the Petroleum Exporting Countries and its allies (led by Russia)

Meetings today:
  • JMMC is scheduled to start at 1400 Vienna time (1200 GMT)
  • The Ministerial meeting then follows at 1500 (1300 GMT)
JMMC is the Joint Ministerial Monitoring Committee. JMMC tracks the compliance of Opec+ members with their production quotas.
Back in July the group agreed to boost output by 400,000 barrels per day every month until at least April 2022. This is a gradual phase-out of cuts agreed to in 2020.
Reuters reported last week that four OPEC+ sources told them producers were considering adding more than that 400K. There were no details given on how much extra, or when supply would increase. It’d be November at the earliest most likely given the cuts in October were confirmed at the previous OPEC+ meeting.
OPEC+ is The Organization of the Petroleum Exporting Countries and its allies (led by Russia)