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Page added on February 19, 2022

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Are Oil Prices Headed Back Above $100 A Barrel?

Consumption

The price of West Texas Intermediate (WTI) opened 2022 at about $75 a barrel (bbl). Last week, the price rose above $90/bbl for the first time since 2014. That was also the last year the price of WTI was above $100/bbl.

To recap, in the first half of 2014, oil prices spent most of the time bouncing between $100/bbl and $105/bbl. But the shale boom had put millions of new barrels of oil into the markets over the course of several years, and by mid-2014 the market was approaching an over-supply situation. The price of oil started to decline, but then in the second half of the year OPEC embarked upon a price war to win back market share that had been lost to the American shale boom.

The result was that the bottom fell out of the oil market. By the end of 2014, the price had declined to $53/bbl. The price remained depressed for all of 2015, and by early 2016 WTI fell below $30/bbl.

At the time, I called this episode OPEC’s Trillion Dollar Miscalculation. I don’t believe that if OPEC knew how far oil prices would fall — and knew that their efforts wouldn’t actually derail the U.S. shale boom — that the cartel would have embarked upon that strategy.

The question now is whether the current situation is more like the first half of 2014, or whether it is more like 2011, when prices rose above $100/bbl and largely stayed there for the next three years.

I would argue that we are somewhere in between. In 2011, the markets weren’t oversupplied, but that’s where they were ultimately headed. U.S. oil production has increased by 600,000 barrels per day (bpd) year-over-year, but we are still 1.5 million bpd below the levels just before the Covid-19 pandemic hit the U.S. Thus, with demand largely recovered to pre-pandemic levels, we are still undersupplied relative to two years ago.

Last month OPEC and its allies said they would increase oil production by a total of 400,000 bpd in February. However, the cartel has been undershooting its production targets. That helps keep oil prices high, especially in light of the slow ramp-up of U.S. oil production.

When I made my energy sector predictions last month, I noted that “OPEC is always the wildcard.” They want the highest oil prices the market can bear, but that is always tempered by non-OPEC oil production. There are also demand factors that OPEC has to consider. High oil prices create incentives for alternatives, like faster adoption of electric vehicles.

So, how will it all shake out? I still believe the U.S. will significantly increase oil production this year, and that will help temper oil prices. It’s not at all clear to me that the 17% price increase in WTI that we saw in January is justified based on the fundamentals.

But oil prices overshoot the fundamentals all the time. WTI at $145/bbl in 2008 overshot the fundamentals, and the oil price plunge deep into negative territory in 2020 overshot the fundamentals. And when the correction toward the fundamentals happens, it can be swift.

Still, with oil just 8% away from that $100/bbl mark, and momentum continuing from January, it seems more likely than not that WTI will reach that level. But how long can it stay there, and where is the top of this current bull market in oil? I will be among those surprised if it’s still at that level in the second half of the year.

Robert Rapier



9 Comments on "Are Oil Prices Headed Back Above $100 A Barrel?"

  1. Theedrich on Sun, 20th Feb 2022 2:30 am 

    America is disintegrating biologically. Ever since the mid nineteen sixties and the insane Vietnam War (most of America’s wars are insane), when the universities were filling up with draft dodgers and Communist agents+sympathisers, the United States has been in decline.  Almost every aspect, every venue, every institution in it has become more “progressive,” intellectually polluted and politically enslaved.  Little by little, the nation once famed for its freedom for ordinary citizens has lost that freedom.

    It makes no difference whether one is talking about racial discrimination, public speech, academic publication, lower-grade instruction in mathematics (!), homosexual propaganda, narcotics pushing, Communism, virtually obligatory special rights for special-needs individuals, hatred of police and especially of Whites, concern for criminals at the expense of their victims, and many other elements of civilization.

    Nor is the U.S. the only advanced nation to experience this loss.  The Canadian Democratic Republic, for instance, and many other Western nations have already become full-blown police states under the mask of “democracy.”

    The voting masses know all about this since they live amidst it and support it by electing anti-civilization forces and politicians that aim to destroy them.  So why do they do this?  Why do they want to be oppressed?

    The true reason is deliberately concealed by, because unacceptable to, the majority.  It has nothing to do with the usual excuses given by politicians and true believers in government divinity.  That reason is biology.

    We have known for some time now that in the human race as a whole, male sperm counts are declining drastically.  Sperm counts, testosterone, and anogenital distance have all been declining since at least 1973 due to endocrine disruptors from manufactured products.  In short, males are increasingly turning into females.  Various chemicals, especially those found in plastics (like phthalates or Bisphenol A [BPA]) are hormone disruptors and are found in pregnant women everywhere.  (Never mind that plastics come from oil.)  These are compounds which wreak havoc on sexual differentiation development in the womb, and prevent fetuses from becoming full males;  they are also responsible for producing individuals with male genitals but sexual attraction to other males, or homosexuality.  The problem is the chemical poisoning of the human race for the sake of the global “economy.”  At this rate, humanity, especially in the “developed” world, is destined for extinction by ~2100.

    In contrast to the usual media lies about it, the female psyche is genetically programmed for submission.  This can be seen very clearly in other primates, especially our closest relatives, the chimpanzees.  When the genetically aggressive males of one group wage war on those of another one, the females of the attacked group watch the battle in trepidation from the sidelines.  Then, after the attackers have won and killed off all of the losing males, their male offspring and the females who have had intercourse with a man (compare Numbers 21:2-3, 31:17f.; Deuteronomy 20:17; Joshua 6:17, 21 in the Old Testament), the spectating females offer themselves sexually to the winners.

    That same behavior, mutatis mutandis and with a few variations depending on culture, occurs with human females.  They seek to be safely part of the herd and to gravitate toward whichever males are in power, variously defined among human societies.  When individuals with male genitalia and bodies, but female brain structures, are threateningly confronted with true political or financial power, they tend overwhelmingly to act in the same way as females.  This explains the widespread submissiveness seen in American and other developed (i.e., hormonically polluted) countries today, where “men” are literally, biologically, becoming women.  And Biden and his Democrat Mafia are accelerating the spread of this plague by importing millions of muds with every form of biologically mutating narcotics and fentanyl imaginable.  We will not mention the many other pollutants that are turning human and other species into zoological chimeras.

    So when large numbers of childless university professors and media operatives harmonize as an army of the living dead to support the latest banal decree of oppression from the regime, we now know the true reason behind their actions.  And it is not the reason given by the hermaphroditic chattering classes.

    It is the reason of species-wide effeminization from self-poisoning.

  2. Biden's hairplug on Sun, 20th Feb 2022 3:27 am 

    What is happening to Anglosphere, do we need to worry?

    The 2022 Winter Olympics, the results are in:

    2022:

    https://nos.nl/peking2022/medailles

    2018:

    https://en.wikipedia.org/wiki/2018_Winter_Olympics_medal_table

    2014:

    https://en.wikipedia.org/wiki/2018_Winter_Olympics_medal_table

    I had hoped that this year, the Netherlands would finally surpass the US, but no, even if they both had 8 gold medals, the US still had a little more inferior metal. The Dutch will have to wait until 2026-Milan.

    Interesting is the sudden rise of China:

    2014 – 1 (16)
    2018 – 1 (16)
    2022 – 9 (3, before the US)

    Expect China to remain a top competitor in the coming years.

    Canada dropped out of the top 10, too busy honking, I guess:

    2014 – 11 (3)
    2018 – 11 (3)
    2022 – 4 (11)

    On top, as always, are the continental Europeans or Germanics or Nordics for short.

  3. Cloggie on Sun, 20th Feb 2022 6:11 am 

    Australians, hands down the most down-to-earth Anglos around (Sky News Australia):

    https://www.youtube.com/watch?v=inPEY_PS4kU

    “‘This is terrifying’: What Justin Trudeau is doing in Canada is ‘insane'”

    (Trudeau, truck off!)

    https://www.youtube.com/watch?v=X9u2CZqvG_I

    “Russian invasion of Ukraine still ‘very unlikely’”

    The unlikeliness of an invasion can be read from the implicit messages from the Chinese:

    https://www.scmp.com/news/china/diplomacy/article/3167739/russia-ukraine-crisis-cold-war-over-chinese-foreign-minister

    “Russia-Ukraine crisis: Cold War is over, Chinese foreign minister says in call for diplomatic solution”

    China pleads for an independent Ukraine (implicitly denying support for a possible Russian invasion), but also rejects NATO enlargement. From this Chinese position one can already deduce that Russia has no intention of invading Ukraine, because it is certain that Russia and China have synchronized their position. Russia doesn’t need to invade, it suffices to support the separatists in Donbass to keep the Ukraine in a state of chaos, making it impossible to join NATO in the first place, the real aim of Russian behavior.

  4. IBelongWithDeadAndNothing on Sun, 20th Feb 2022 8:35 am 

    I hate earth and I hate the cosmic energetic project of the GOD’s. I really chrissto-sophia familly and don’t want to be part of it. There is nothing for me in this world, either on earth or in the cosmic universe. Death and becoming nothing is where I belong.

  5. Biden's hairplug on Sun, 20th Feb 2022 10:32 am 

    A not unlikely scenario for the Ukraine: NOT an immanent invasion by Russia, but a developing civil war in the Ukraine itself, that could evolve into a proxy-war Russia-NATO.

    https://www.politico.eu/article/ukraine-russia-war-consequences-invasion-europe/

  6. Biden's hairplug on Sun, 20th Feb 2022 11:34 am 

    “Calgary Freedom Rally Feb 19 2022”

    https://www.youtube.com/watch?v=Koy6nEQhjXA

  7. Duncan Idaho on Sun, 20th Feb 2022 1:40 pm 

    Dumbo Throws a Tantrum: Furious Trump Says Taking Home Classified Documents Was Part of “Routine” Process

    https://news.yahoo.com/furious-trump-says-taking-home-021146399.html

  8. Duncan Idaho on Sun, 20th Feb 2022 1:54 pm 

    I’m not for putting down weasels:

    https://images.dailykos.com/images/1022165/story_image/teddusassclownus.png?1640975264

  9. Biden’s hairplug on Sun, 20th Feb 2022 4:21 pm 

    Nick Griffin has a good analysis regarding the Ukraine drama:

    https://www.unz.com/article/ukraine-implementing-minsk-accords-ending-conflict-very-last-thing-us-uk-want-ex-mep-says/

    “Ukraine Implementing Minsk Accords & Ending Conflict ‘Very Last’ Thing US, UK Want, Ex-MEP Says“

    The attempt to force Russia into war in Ukraine, by contrast, is not really about promoting the geopolitical interest of the Dollar Empire – it is about its very survival.

    The US is no longer the self-confident colossus that bestrode the world a few decades ago. America in 2022 is a financial, political, economic, military and social basket case, and its UK ally is in the same very leaky boat. The liberal Anglo world is further disturbed by the situation in Canada, which is now in the critical phase of a historic struggle between the Trudeau regime and a large and well-organised section of the working population…

    The fundamental targets of the NATO warmongers in this crisis are not Donbass, nor even Russia, but Germany, and China’s One Belt, One Road initiative. They are trying to keep Germany down, and China out; failure to do both means that the US will become an isolated rust-belt island thousands of miles away from the core economic block of the world…

    The same development also spells the forthcoming end of the dollar as the world’s financial reserve currency, while America’s time as a sole military superpower has already clearly ended. This is a classic example of the Thucydides’ Trap, the moment when an emerging power threatens to displace an existing great power as the hegemon of the age, a transition which all too often is accompanied by a war of desperation.

    Griffin gets it.

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