RE:RE:Biden empty threat equals Buying opportunity Oil is rangebound and sideways for a short while, IMO.
The talk of a potential release of some SPR crude, or of an export restriction is keeping a temporary ceiling on oil prices.
Decreasing oil and product inventories are keeping a floor under it.
This can certainly be traded as it bounces up and down in between, for those so inclined. Barring major events, all E&P shares will most likely be sideways for a short while as the market digests the last increase, before continuing the next leg up.
In the meantime, one can be confident iin the fact that even if oil stays near the same levels, we are trading at such depressed FCF multiples, an increase in share price is the most likely direction for them to go as valuations start to normalize with time as they always do.
I beleive there are some fiscal budgetary SPR releases already planned, that Sleepy Joe might publicize as his own doing to save face and show he is trying to do something about gas prices, however I don't expect much. Releasing oil from the SPR has to eventually be paid back at a later date, so it is net neutral.
An SPR release, or even the threat of one would prevent further investment in US shale, as companies are risk adverse and will hold off drilling if they smell a potential downside risk to prices.
The restriction of oil exports would be counter productive in the same way, not to mention it would bring the crude mix out of balance as US refineries are set up to produce products from medium and heavier oil, while exports have been of the excess lighter grades leading to a surplus of what they don't want.
In the end, there is nothing they can really do to seriously affect oil prices other than bringing Iranian or Venezuelan crude back onto the world market, so one should consider to use any dip as a buying opportunity.
Rational43 wrote: This market has gotten very big on knee jerk reactions to political announcements.
Chinese are releasing copper reserves....copper goes down, then a month later the LME is running out of Copper and Chinese IMPORTS are at record levels.
Biden threatens to release reserves, because the market is desperately short, and people view it as weakness, when all it does is artificially suppress demand even further than it already is.
And all the nervous nellies and dividend speculators in this market are all worried that if they don't make some money in the next six months all their energy stocks will be worthless soon.
I love the early stages of a long bull market, its so funny and comically easy to see the same patterns now as in 2003.