Oil Price Watch Thread

[Yuli Ban]

Oil drops 13% in worst day of 2021, breaks below $70 as new Covid variant sparks global demand concerns

Oil posted its worst day of the year on Friday, tumbling to the lowest level in more than two months as the new Covid-19 strain sparked fears about a demand slowdown just as supply increases.

The leg lower came amid a broad sell-off in the market with the Dow dropping more than 900 points. The World Health Organization warned Thursday of a new Covid variant detected in South Africa. It could be more resistant to vaccines thanks to its mutations, although the WHO said further investigation is needed.

U.S. oil settled 13.06%, or $10.24, lower at $68.15 per barrel, falling below the key $70 level. It was the contract’s worst day since April 2020. WTI also closed below its 200-day moving average — a key technical indicator — for the first time since November 2020.

International benchmark Brent crude futures slid 11.55% to settle at $72.72 per barrel.

[Yuli Ban]

[caltrek]

What a difference seven months can make.

Item: WTI Crude as of Jun 10, 2022 at 1:27 p.m. EDT was $120.38. Source: https://www.marketwatch.com/investing/f ... electronic

Item:
National Average Gas Price on the Cusp of Crossing $5
by Matt Phillips
June 10, 2022

Introduction:

(Axios) Gasoline prices are about a cent shy of the never-before-seen national average level of $5 a gallon, and it's unclear how Americans — and the economy — will react.

Why it matters: Prices at the pump play an outsized role in the minds of Americans and are often seen as harbingers for everything from plummeting presidential approval ratings to ugly recessions.

Driving the news: The daily U.S. average national price for a gallon of regular climbed to $4.99 as of Thursday morning, according to AAA.

• And surging prices in the wholesale futures markets — which are leading indicators of retail prices — suggest there's little hope for near-term relief.

State of play: Setting aside the brief, unique COVID recession of 2020, 10 of the 11 recessions the U.S. has experienced since World War II have been preceded by a sharp rise in energy prices.

Read more here: https://www.axios.com/2022/06/10/gas-pr ... e-5-gallon

[caltrek]

The Biggest Myths About Gas Prices
by Rebecca Leber
June 27, 2022

Introduction:

(Vox) Gas prices are still climbing, and President Joe Biden has nothing but bad options.

Last week, Biden called on Congress to suspend the federal gas tax for three months — a move that would lower gas prices by 18 cents per gallon. But the proposal for a gas tax holiday already looks to be dead. Republicans have remained firmly opposed, arguing the real problem is Biden’s climate agenda, and Democrats have also called it “shortsighted” to redirect the money away from roads.

That leaves Biden with just the limited powers of the bully pulpit to make a difference in costs. On Thursday, he used it to bring oil executives to the White House to meet with Energy Secretary Jennifer Granholm, after weeks of accusations that they are ripping off consumers.

The US would be a very different kind of economy if the president could simply turn on and off the faucet for oil. But by design, oil is a free and global market, one that in recent years has been shaped by a decade of low profit margins, turmoil from the pandemic, and Russia’s war on Ukraine. In March, I wrote about what to make of the political theater surrounding gas prices. The list of myths is getting longer as prices climb past $5 a gallon.

Myth 1: Federal and state gas tax holidays are the answer…
Myth 2: Oil companies are price-gouging American consumers…
Myth 3: Biden killed oil production…
Myth 4: The oil and gas industry can quickly ramp up production to make a dent in prices…
Myth 5: LNG exports will fix Europe’s problems and help US gas prices…
Myth 6: The economy is doomed because of high gas prices...

Read more here: https://www.vox.com/23169692/myths-gas ... inflation

caltrek’s comment: I am not sure I agree that No. 2 is a myth. The argument seems to be that oil companies are just charging what the market will bear. To me, that just says that the market will now bear price gouging. Perhaps it is just a matter of semantics, as consumers clearly suffer no matter how you argue that point.

[caltrek]

G7 Leaders Pledge to Pursue Price Caps on Russian Oil
by Ivana Siric
June 28, 2022

Introduction:

(Axios) Members of the G7 on Tuesday agreed to explore the possibility of imposing price caps on Russian oil as they reiterated vows to "impose severe and immediate economic costs" on Russia amid its ongoing war in Ukraine.

Why it matters: Russia is the world's second-largest crude oil exporter and Europe, unlike the U.S., is hugely reliant on Russian oil, gas and coal, Axios' Ben Geman writes.

• While the sanctions imposed on Russia in the wake of its invasion of Ukraine have been severe, the country has nevertheless been able to continue selling oil.

State of play: The G7 leaders said they would consider a "range of approaches" when it comes to Russian oil, according to the leaders' communique.

• Among these approaches will be the possibility to ban all transport of Russian oil "unless the oil is purchased at or below a price to be agreed in consultation with international partners," the G7 leaders said in the communique.

• "We invite all likeminded countries to consider joining us in our actions," they added, noting that they have tasked their relevant ministers with further exploring the details of such a move.

Read more here: https://www.axios.com/2022/06/28/g7-ru ... price-cap

[caltrek]

'The Problem is Corporate Greed, Boss': Bezos Blasted for Defense of Big Oil Price-Gouging
by John Queally
July 4, 2022

Introduction:

(Common Dream) Progressives ripped billionaire Jeff Bezos for his latest defense of corporate profiteering over the weekend in which the Amazon founder and world's second-richest person criticized a call by President Joe Biden for oil companies to lower the price of gasoline.

On Saturday, Bezos accused President Joe Biden of "misdirection" and ignorance "of basic market dynamic" in response to a tweet from the president which called on companies setting gasoline prices to "bring down the price you are charging."

While Bezos' comment sparked a sharp response from White House press secretary Karine Jean-Pierre—who said pump prices remaining constant despite a steep drop in crude oil prices isn't "basic market dynamics" but rather "a market that is failing the American consumer"—progressive critics also jumped into the fray.

Warren Gunnels, a longtime aide of Sen. Bernie Sanders and who currently serves as the Majority Staff Director for the U.S. Senate Budget Committee, responded to the back-and-forth between the White House and Bezos by offering a comparative rundown between the current price of gasoline and what it was in 2014:

Read more here: https://www.commondreams.org/news/2022 ... e-gouging

[caltrek]

Gas Prices Keep falling
by Madeleine Ngo
July 22, 2022

Introduction:

(Vox) Drivers have seen it at the pump, and Biden administration officials have repeatedly touted it in recent days: Gas prices are dropping, and they have been for weeks.

Although the decline in prices is a welcome reprieve for Americans whose budgets have been strained by higher costs for nearly everything, it’s reasonable to ask: Will this last?

Gas prices are averaging $4.41 a gallon across the country as of July 22, according to the American Automobile Association, down from last month’s peak of more than $5 a gallon. Although gas prices have been falling for more than 30 days straight, the national average is still substantially higher than a year ago, when prices averaged $3.16 a gallon, according to AAA data. Diesel prices are also averaging $5.46 a gallon as of July 22, down from $5.81 a month ago.

Rising gas prices have been a major driver of inflation. A government report released last week showed that an increase in energy prices fueled a big jump in inflation in June, when the Consumer Price Index rose 9.1 percent from a year earlier, a new four-decade high. Gas prices soared after demand for oil rebounded from pandemic lows and Russia’s invasion of Ukraine drove up oil prices.

Several factors have pushed gas prices down, including a drop in oil prices as recession fears grow and a smaller-than-expected impact from Western sanctions on Russia. Supply has also improved relative to demand, which has slightly fallen in recent weeks and remains at levels lower than a year ago, according to data from the US Energy Information Administration.

The article goes on to discuss four factors that will determine if gas prices continue to fall or rise again this year.

Read more here: https://www.vox.com/2022/7/22/2327145 ... nflation

[caltrek]

Big Oil Quick to Jack Up Gasoline Prices But Slow to Drop Them
by Kenny Stancil
July 25, 2022

Introduction:

(Common Dreams) Over the past four months, Big Oil has rushed to raise gasoline prices—sometimes charging far more at the pump than the increased cost of oil would warrant—and dawdled to lower them when crude's valuation declined, according to a new analysis released Monday by the progressive watchdog group Accountable.US.

Accountable.US acknowledges that the cost of oil plays an important role in determining the price of retail gas. But to understand why prices at the pump have outpaced the escalating cost of crude and why, when the cost of crude has fallen temporarily during the last 12 weeks, savings have very slowly—and only partially—been passed on to consumers, the group says look no further than fossil fuel corporations' desire to maximize profit margins.

"For months, oil and gas companies have price gouged consumers, squeezing record-breaking profits out of Americans and forcing many into dire financial straits," Jordan Schreiber, director of Energy and Environment at Accountable.US, said in a statement.

"When the price of crude oil increased, consumers were immediately forced to shoulder the high cost and more," said Schreiber. "Now, as crude oil prices fall, the industry needlessly drags its feet by lowering gas prices at a significantly slower rate than when they increased."

Read more here: https://www.commondreams.org/news/2022 ... -analysis

[caltrek]

Corporate Media Fails to Connect Gas Price Surge and Climate Crisis
by Olivia Riggio
July 30, 2022

Introduction:

(Common Dreams) Gas prices hit an all-time high in June, with the national average surpassing $5 per gallon. A shortage of Russian oil due to sanctions imposed by the European Union, United States and others is largely to blame, and in response President Biden has urged US oil companies and other producers—like Saudi Arabia and the United Arab Emirates—to increase their production to fill the gap.

It's a move completely inimical to Biden's stated commitment to tackling the climate emergency and shifting to renewable energy, made all the more striking as temperatures surpass records in India, Pakistan, Europe, and the Southwest and Central US. Yet the obvious climate angle of the gas price story was rendered virtually invisible by corporate media.

A FAIR study of nightly news shows found a dearth of segments connecting the record gas prices to any climate or alternative energy conversation.
This silence perpetuates inaction that poses climate solutions as lofty, unattainable pipe dreams, and suggests the only mitigation for fuel shortages is relentlessly drilling more of this harmful and nonrenewable resource.

Read more here: https://www.commondreams.org/views/202 ... te-crisis

[caltrek]

Oil Companies are Delivering Record Returns for Wall Street. That Could be Good News for Climate Change.
by Eric Gardner
August 18, 2022

Introduction:

(More Perfect Union) ExxonMobil and Chevron delivered record-shattering profits last quarter, returns that financial news outlet Bloomberg described as ”almost comically huge.” Exxon, the world’s largest non-state energy company, posted $18.5 billion in profit, while Chevron, the nation’s second largest energy company, delivered $11.6 billion.

Even more notable is what oil companies are doing with their profits. Surprisingly, it may be very good news for climate change.

Broadly speaking, executives can use company profits in two ways. They can redistribute the profits to shareholders or reinvest the profits back into the business. In 2014, Chevron and Exxon reinvested over $68 billion through capital expenditures (CapEx). CapEx includes building new oil wells and repairing outdated refineries–both things that increase fossil fuel consumption.

This year America’s two oil giants are on pace to invest around $20 billion in CapEx—a decline of over 67% in less than a decade. Instead, management is focused on transferring as much profit as possible to shareholders. In Q2, rather than invest in future oil capacity, Chevron and Exxon showered investors with $6.7 billion in dividend payments and made promises of $30 billion worth of stock repurchases in the next few years. Right now the companies have already spent more on dividends than they did for all of 2014.

This development should be viewed as what it is: a market-based transition to clean energy.

Read more here: https://perfectunion.us/oil-companies- ... e-change/

[caltrek]

Europe’s Plan to Wean Itself Off Russian Gas Just Might Work
by Matt Reynolds
August 29, 2022

Introduction:

(Mother Jones) In 1970, West German politicians and gas executives signed a landmark deal with the Soviet Union that would shape the next half-century of European energy policy. West Germany promised to supply the USSR with steel pipes, while in exchange the USSR would extend a gas pipeline to the border of West Germany and start pumping Soviet gas beneath the Iron Curtain and into Western Europe. The trade deal was one form of Ostpolitik—a wider policy of thawing relations between the USSR and West Germany that would earn then West German chancellor Willy Brandt the Nobel Peace Prize in 1971.

Brandt—who died in 1992—may not have imagined just how intertwined the two former enemies would become. By the time of German reunification in 1990, gas from the USSR accounted for more than 30 percent of the country’s gas consumption. By 2021, Russia was supplying around 40 percent of the European Union’s natural gas, with some smaller countries, such as Latvia, almost completely reliant on Russia for their supplies. Germany, with its heavy steel industry and gas-powered heating, relied on Russia for just under half of its natural gas.

The Russian invasion of Ukraine in February 2022 exposed deep fissures in the EU’s energy policy. After EU sanctions on Russia, the Russian state-controlled energy firm Gazprom announced it was slashing gas exports through one of its main pipelines to about 20 percent of capacity. The share of Russian gas entering Europe has dropped to 15 percent, squeezing already-inflated prices to new highs. In the UK, which is sensitive to gas prices on international markets, average energy bills are projected to reach nearly four times their January 2019 levels.

Conclusion:

Gas prices are likely to stay high for a few years, says (Chi Kong) Chyong, (a research associate at the University of Cambridge)…Rising fuel prices could push half of UK households into fuel poverty by next year, according to one study. By 2030 the EU should have overturned its reliance on Russian gas for good, but getting there will mean several tough years of energy squeezes.

Read more here: https://www.motherjones.com/environmen ... ural-gas/

For a brief article on the University of York study that concluded that UK households may fall “into fuel poverty”: https://www.york.ac.uk/news-and-events ... overty-uk/

[caltrek]

R.I.P. Europe's Energy System
by Matt Phillips
September 7, 2022

Introduction:

(Axios) In what would have been an unimaginable scenario just a few months ago, Russia has halted all natural gas flows to Europe through its Nord Stream pipeline — plunging the continent into a new era of uncertainty that's reverberating across markets.

Why it matters: The gas cut-off bodes incredibly poorly for economic growth in Europe, as a range of industries dependent on abundant Russian gas are being forced to slash production.

• German chemical giant BASF recently warned of growing cutbacks tied to surging energy prices.
• France's largest aluminum smelter said Tuesday it would cut production by roughly 20%.

What they're saying: "This broad and long-term industrial and energy strategy that the government — but also huge parts of the energy intensive industries —have pursued for decades, building entire sectors like the chemical industry around very cheap Russian gas, has collapsed," Lion Hirth, a professor of energy policy at Berlin-based Hertie School of Governance, tells Axios.

Read more here: https://www.axios.com/2022/09/07/rip-e ... gy-system

[caltrek]

Wall Street Giants Set to Smash Profit Records Off Global Hunger, Energy Crisis
by Jake Johnson
September 9, 2022

Introduction:

(Common Dreams) Russia's war on Ukraine has wreaked havoc on global commodity markets, driving up energy and food prices and exacerbating hunger emergencies around the world.

But while disastrous for the global poor—millions of whom are living on the brink of famine—the chaos has been a major boon for Wall Street giants, according to new data showing that the world's 100 largest banks are on pace to smash commodity trading profit records this year.

"The 100 biggest banks by revenue are set to make $18 billion from commodities trading in 2022," Bloomberg reported Friday, citing figures from the London-based firm Vali Analytics. "That would be the highest in the data, which goes back 14 years, and exceed the previous high watermark in 2009."

"The prediction is the latest evidence that the wild swings in energy prices triggered by the war in Ukraine are delivering a boon to commodity traders, even as they push European nations into crisis," Bloomberg added. "Vali, an analytics firm that tracks trading business, compiled data that includes the leading five banks in commodity trading: Macquarie Group Ltd., Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc., and Morgan Stanley."

Further extract:

Energy prices have also eased but remain high, contributing to cost-of-living crises throughout Europe and other parts of the globe.

Read more here: https://www.commondreams.org/news/2022 ... gy-crisis

[caltrek]

Gas Prices are Now Cheaper than Before Russia Invaded Ukraine
by Herb Scribner
December 1, 2022

Introduction:

(Axios) The average cost for a gallon of gas in the U.S. has dropped below the price it was before Russia invaded Ukraine earlier this year, according to AAA.

Why it matters: It is the first time since February that gas prices cost less than $3.50 per gallon, a significant decrease from record prices in the summer.

Driving the news: A gallon of regular gas costs about $3.47 nationally on average, according to AAA. That's below the $3.54 average on Feb. 24, 2022 — the day before Russia's invasion began and gas prices soared to record highs.

• Prices at the pump have dropped 12 cents since last week and 29 cents over the last month, per AAA.

Flashback: In June, the average cost for a gallon eclipsed the $5 mark for the first time.

Read more here: https://www.axios.com/2022/12/01/gas-p ... a-ukraine

[caltrek]

Biden Administration Set to Start Refilling Oil Reserve
by Ben Lefebvre
December 16, 2022

Introduction:

(Politico) The Biden administration is planning to begin refilling the Strategic Petroleum Reserve, a senior administration official said Friday, marking the end to the massive supply releases that the White House ordered to tame the sharp price spikes earlier this year.

President Joe Biden had ordered the Energy Department to begin releases from the reserve last year, and he sharply ramped up those sales after Russia invaded Ukraine in February — sending crude oil prices soaring and driving up gasoline to record levels. Total releases from the reserve this year totaled more than 211 million barrels, putting the inventories at their lowest levels since 1984.

Republicans had accused Biden of misusing the SPR for political purposes, but voters backed the measures by a clear majority, and retail gasoline prices retreated sharply as crude oil markets calmed. U.S. benchmark WTI crude futures jumped nearly $2 on the announcement and were trading at $75 per barrel early Friday afternoon. That’s well below the peak of over $120 a barrel earlier this year.

Average retail gasoline price stood at $3.178 per gallon, according to the American Automobile Association — down from the record high at $5.02 in June and nearly 15 cents under the year ago level.

The Energy Department will start with an initial request for 3 million barrels, asking companies for the barrels to be delivered in February, the administration official said on a call with reporters. Companies participating in the process must submit their offers by Dec. 28 and will offer oil at a fixed price.

Read more here: https://www.politico.com/news/2022/12/ ... -00074369

[caltrek]

Related to high prices were:

“Monster Profits” Highlight Fossil Fuel Industry’s Destructive Resilience
by Oliver Milman
February 10, 2023

Introduction:

(Mother Jones) While 2022 inflicted hardship upon many people around the world due to soaring inflation, climate-driven disasters, and war, the year was lucrative on an unprecedented scale for the fossil fuel industry, with the five largest western oil and gas companies alone making a combined $200 billion in profits.

In a parade of annual results released over the past week, the “big five”—ExxonMobil, Chevron, Shell, BP, and TotalEnergies—all revealed that last year was the most profitable in their respective histories, as the rising cost of oil and gas, driven in part by Russia’s invasion of Ukraine, helped turbocharge revenues.

ExxonMobil, the Texas-based oil giant, led the way with a record $55.7 billion in annual profit, taking home about $6.3 million every hour last year. California’s Chevron had a record $36.5 billion profit, while Shell announced the best results of its 115-year history, a $39.9 billion surplus, and BP, another London-based firm, notched a $27.7 billion profit. The French company TotalEnergies also had a record, at $36.2 billion.

When the 2022 results for all publicly traded oil and gas companies are tallied the total profits are expected to exceed $400 billion, “a number we’ve never seen before, and one that was built off the backs of working families who were victimized by oil and gas executives’ greed,” according to Claire Moser, deputy executive director of the US activist group Climate Power.

The stratospheric profits were criticized as “outrageous” by Joe Biden during his State of the Union address on Tuesday. Biden said that “we’re still going to need oil and gas for a while” but the US president attacked companies for enriching shareholders through share buybacks rather than helping alleviate rising gasoline costs for drivers.

Read more here: https://www.motherjones.com/environmen ... -climate/

[wjfox]

World Bank warns oil price could soar to record $150 a barrel

Mon 30 Oct 2023 11.00 GMT

Oil prices could soar to a record high of more than $150 a barrel if the war between Israel and Hamas leads to a repeat of the full-scale conflict in the Middle East witnessed 50 years ago, the World Bank has warned.

In the first major assessment of the economic risks of an escalation of the war beyond Gaza’s borders, the World Bank said there was a risk of the cost of crude entering “uncharted waters”.

A “large disruption” scenario comparable with the Arab oil boycott of the west in 1973 would create supply shortages that would lead to the price of a barrel of oil increasing from about $90 to between $140 and 157. The previous record – unadjusted for inflation – was $147 a barrel in 2008.

“The latest conflict in the Middle East comes on the heels of the biggest shock to commodity markets since the 1970s – Russia’s war with Ukraine,” said Indermit Gill, the World Bank’s chief economist. “That had disruptive effects on the global economy that persist to this day.

“Policymakers will need to be vigilant. If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades – not just from the war in Ukraine but also from the Middle East.”

https://www.theguardian.com/business/20 ... 0-a-barrel

[wjfox]

Fears of higher oil prices after Red Sea attacks

15 minutes ago

Attacks on commercial ships in the Red Sea risk pushing up the price of oil and other goods, analysts have warned.

Several firms have paused shipments through the route after vessels were attacked by Houthi rebels in Yemen.

The world's second largest shipping line, Maersk, has said it will reroute some of its vessels around the Cape of Good Hope.

The disruption has led the US to launch an international naval operation to protect ships in the Red Sea route.

Countries joining the security group include the UK, Canada, France, Bahrain, Norway and Spain.

https://www.bbc.co.uk/news/business-67758126

[caltrek]

Why Unlocking Venezuelan Oil Won’t Mean Much for U.S. Energy Prices
Interview with Amy Myers Jaffe,
January 13, 2026

Extract:

(The Conversation) How does a potential increase in Venezuelan oil production affect U.S. domestic oil producers?

Over time, the impact of the restoration of Venezuelan oil production on oil prices is hard to predict. That’s because it will likely take a decade or more before Venezuela’s oil production levels could be fully restored. Long-term oil prices are notoriously tricky to forecast.

Generally speaking, U.S. shale production rates and profitability benefit when oil prices are above $50 a barrel, as they have been since 2021. U.S. oil production rose to 13.8 million barrels per day for the week ending Dec. 26, 2025, up slightly from the end of 2024. Forecasts suggest a slight increase in 2026 as well, if oil prices stay relatively flat.

Longer term, all bets are off, since the Organization of the Petroleum Exporting Countries, or OPEC – a group of countries that coordinate global petroleum production and sales – has a history of telling members not to increase production when they add new oil fields, which sometimes leads to so much disagreement that a price war erupts.

The last time Venezuela moved to increase its production significantly, in the 1990s, oil prices sank below $10 a barrel. Major OPEC members like the United Arab Emirates have been expanding capacity in recent years, and others with large reserves like Libya and Iraq aspire to do the same in the coming decade as well. The UAE has been asking the group for permission to increase its production, causing difficulties in the group’s efforts to agree on what their total production and target oil price should be. That could be good news for consumers, if OPEC disunity leads to higher supplies and falling prices.

Read more here: https://theconversation.com/why-unlock ... s-273194

[caltrek]

‘Absolutely Massive’ Price Shocks Coming as Trump’s Iran War Drives Up Gas, Diesel Prices
By Brad Reed
March 4, 2026

Introduction:

(Common Dreams) President Donald Trump’s unprovoked attack on Iran has sent oil prices surging, and it’s already hurting Americans at the gas pump.

Petroleum industry analyst Patrick De Haan reported on Wednesday that the average US price for diesel has hit $4 per gallon, the highest it’s been since April 2024.

De Haan also projected that the price of diesel would keep rising in the coming days before eventually reaching a price in the range of $4.25 to $4.45 per gallon.

The average price of gasoline is now approaching $3.20 per gallon, De Haan reported, and is projected to rise to at least $3.30 per gallon in the coming days. According to data from the US Energy Information Administration, average US gas prices haven’t been that high since September 2024.

Nobel Prize-winning economist Paul Krugman on Wednesday flagged data showing that the price of Reformulated Blendstock for Oxygenate Blending (RBOB) gasoline futures contracts has been going through the roof since the start of the Iran war.

Read more here: https://www.commondreams.org/news/iran-war-gas-prices