Följ oss

Analys

SEB – Råvarukommentarer vecka 17 2012

Publicerat

den

Sammanfattning: Föregående vecka

  • Analyser - Prognos på priser för råvarorBrett råvaruindex: +0,33 %
    UBS Bloomberg CMCI TR Index
  • Energi: +0,37 %
    UBS Bloomberg CMCI Energy TR Index
  • Ädelmetaller: -0,15 %
    UBS Bloomberg CMCI Precious Metals TR Index
  • Industrimetaller: +1,75 %
    UBS Bloomberg CMCI Industrial Metals TR Index
  • Jordbruk: +0,14 %
    UBS Bloomberg CMCI Agriculture TR Index

Kortsiktig marknadsvy:

  • Guld: Neutral
  • Olja: Sälj
  • Koppar: Sälj
  • Majs: Neutral/sälj
  • Vete: Neutral

Guld

Guldpriset och spekulativa positioner fram till 2012-04-20

  • Guldpriset föll 0,4 procent förra veckan. Under veckan låg fokus på spanska obligationsemissioner, spansk 10-års ränta steg igen över 6 procent.
  • Utvecklingen i Spanien är problematisk. Landet tyngs av stigande räntor, problem att få ner det offentliga underskottet och eventuella ytterligare behov att stötta banker.
  • Det krävs besparingar vilka riskerar en ännu sämre ekonomisk utveckling som följd.
  • Öppna positioner i terminskontrakt på Comex föll veckan som gick vilket grafen till vänster visar men fysiska guld ETF: er såg inga större in eller utflöden och världens största guld ETF SPDR har inte haft utflöden under veckan.
  • Efterfrågan på guld i Indien kommer sannolikt att öka i samband med veckans festival ”Akshaya Tritya”.
  • På onsdag riktas blickarna mot USA och räntebesked från FOMC. Indikationer på ytterligare QE3 kommer att ha stor betydelse för guldprisets utveckling.
  • Teknisk Analys: Efter ett försök upp i medelvärdesbanden har vi under inne-varande vecka åter drivit ned under dessa. Detta är dock ännu ingen fara på taket och vi vidhåller att en potentiell lågpunkt har passerats så länge vi inte faller under 1611. En uppgång och framför allt en stängning över 1680 skulle vara klart positivt för vår positiva vy,

Neutral åsikt om guldpriset på kort sikt

Olja

Brentoljans prisutveckling januari 2011 till april 2012

  • Oljepriset steg åter på fredagen och det prisfall vi sett i början av veckan återhämtades och priset stängde oförändrat jämfört med föregående vecka.
  • Oron kring Iran och landets atomenergiprogram har minskat efter förra helgen då västländer mötte Iran för samtal som beskrevs ha varit ”konstruktiva”.
  • Irans oljeminister uttalade emellertid förra veckan att Iran kommer att sluta exportera till Europa om inte nästa möte i Bagdad, den 23 maj, blir ”positivt”.
  • Europa har redan beslutat om ett totalförbud mot import av iransk olja från den först juli och många oljebolag har förberett sig på förbudet genom att leta substitut från bland annat Saudiarabien och Förenade Arabemiraten.
  • Tisdagens APIs oljestatistik visare att råoljelagersteg steg med 3,4 miljoner fat. DOE data på onsdagen visade att råoljelager steg med 3,9 miljoner fat.
  • Enligt Bloomberg News räknar 17 av 30 analytiker med sjunkande oljepriser
  • Teknisk Analys: I och med nedgången under 55dagars bandet har vi övergivit vår medelsiktigt positiva vy och anser att sannolikheten för att få se den sista (?) uppgången till 129- 131 nu måste betraktas som låg. Ett återtest av 55dagars bandet för att prova validiteten i brottet ligger i korten för nästkommande vecka. Vi tror att man ska sälja en sådan reaktion till 120/122.

Sälj olja med SEB råvarucertifikat Short Olja A S

Koppar

Spekulativa positioner i koppar - Graf

  • Kopparpriset steg 2,7 procent förra veckan.
  • HSBC:s inköpschefsindex för Kina visade 49.1 för april. Det var en ökning från förra månadens siffra, 48.3, men det är samtidigt den sjätte månaden i rad som indexet hamnar under 50-nivån (som innebär att fler ser försämring än förbättring).
  • Man har sett att fastighetspriser i 37 av 70 städer i Kina föll nio procent på årlig basis i mars vilket kan tyda på en viss nedkylning i landets ekonomi. Kinesiska myndigheter har uttryckt en önskan att se lägre fastighetspriser.
  • Kinas import av koppar har varit stadig en längre tid. Mycket tyder på att importen har hamnat i lager och många analytiker anser att kinesiska kopparlager ligger på rekordhöga nivåer.
  • Kortsiktigt fortsätter vi att tro på ett lägre kopparpris.
  • Teknisk Analys: Brottet ned ur topp formationen bör inom kort fortsätta pressa priserna lägre. Den lilla reaktion vi nu sett ifrån den medellånga stödlinjen ser väldigt svag ut och bör därför snart reverseras och en ny nedgångsfas ta vid.

Sälj koppar med Short KOPPA A S - SEB råvarucertifikat

Majs

Spekulativa positioner i majs fram tom april 2012

  • Vår kortsiktigt negativa syn på majsen har visat sig stämma förhållandevis väl den senaste tiden. Under förra veckan gick priset på majkontraktet i Chicago ned med 2,66 procent. Då den amerikanska dollarn försvagades under samma period var den motsvarande rörelsen i svenska kronor en nedgång med över 4 procent.
  • En stark drivkraft bakom förra veckans negativa prisutveckling var planteringen av majs i USA, där det amerikanska jordbruksdepartementet (USDA) i sin rap-port från den 17/4 meddelade att 17 procent av landets skörd nu har planterats. För ett år sedan hade 5 procent planterats och snittet de senaste fem åren ligger även det på 5 procent. Varmt väder under mars och god nederbörd under första halvan av april innebär mycket goda förutsättningar för planteringen av majs.
  • I Chicago fortsätter andelen spekulativa majsköpare att minska. Odlingsprocessen i USA samt positiva väderprognoser minskar incitamentet att ha majs i portföljen. Man bör dock vara medveten om att det från kinesiskt håll har uttryckts intresse för att köpa majs om priserna fortsätter falla, vilket innebär att det bör finnas ett golv för majsen. För att priset ska nå detta golv bör det nog falla runt 10 procent från nuvarande nivå.
  • Det som möjligen skulle kunna tala för majsen den närmaste tiden är fortsatta försämringar av utbudet från Argentina och Brasilien, detta efter ovanligt torra väderförhållanden de senaste månaderna.
  • Fundamentalt förhåller vi oss svagt negativa till majspriset.
  • Teknisk Analys: Det misslyckade brottet under 624 ½ tillsammans med relativt aggressivt köpande efter det falska brottet gör att vi ser en viss ytterligare uppåtpotential för nästkommande vecka. Om historien ska fortsätta upprepa sig borde vi inom ett par veckor igen testa den övre delen av årets intervall.

Kommande pris på majs

Vete

Prisutveckling på vete (Matif)

  • Till skillnad från vetet i Chicago kunde vi under förra veckan se en uppgång hos kvarnvetet i Paris. Bakgrunden till detta är att samtidigt som utsikterna för den amerikanska skörden ser goda ut är de desto sämre i Europa. En del analytiker bedömer att den franska veteskörden kommer att bli något sämre än tidigare, detta efter den kalla vintern.
  • Ett Europeiskt land som har stora problem med spannmålsproduktionen är Spanien, där det spanska jordbruksdepartementet i sin senaste prognos be-dömer att landets veteproduktion kommer att falla med 22 procent jämfört med förra året. Trots att den ryska skörden som en konsekvens av den kalla vin-tern väntas bli något lägre än föregående skördeår verkar landets export bli omfattande. Den stora flaskhalsen är dock logistiken, där dåliga vägar och svaga järnvägsförbindelser begränsar flödet från de centrala delarna av landet ut till hamnarna.
  • På investeringssidan fortsätter förvaltarna att dra ned sin exponering mot vete, en utveckling som varit rådande sedan slutet av mars.
  • Det är intressant att följa efterfrågerelationen mellan vete i USA och i Europa. Fortsätter priset att stiga i Europa och minska i USA bör reaktionen bli en minskad efterfrågan på MATIF-vete.
  • Fundamentalt är vi försiktiga säljare av vete, detta särskilt då majspriset fortsätter att falla. De tekniska signalerna visar istället på en fortsatt uppgång som mest trolig och därför är vi denna vecka neutrala när det gäller vetepriset.
  • Teknisk Analys: Så där jag, efter flera veckor av kontinuerligt köpande i 55dagars bandet har marknaden innevarande vecka dragit iväg norrut. Ett nytt årshögsta ligger i korten och ett lyckat brott över 219 sätter fokus på 2011 års topp, 254. Följaktligen rekommenderar vi att även framgent ligga lång. Möjligtvis kommer en viss vinsthemtagning att ske vid 221/22.

Neutral prognos på vete

[box]SEB Veckobrev Veckans råvarukommentar är producerat av SEB Merchant Banking och publiceras i samarbete och med tillstånd på Råvarumarknaden.se[/box]

Disclaimer

The information in this document has been compiled by SEB Merchant Banking, a division within Skandinaviska Enskilda Banken AB (publ) (“SEB”).

Opinions contained in this report represent the bank’s present opinion only and are subject to change without notice. All information contained in this report has been compiled in good faith from sources believed to be reliable. However, no representation or warranty, expressed or implied, is made with respect to the completeness or accuracy of its contents and the information is not to be relied upon as authoritative. Anyone considering taking actions based upon the content of this document is urged to base his or her investment decisions upon such investigations as he or she deems necessary. This document is being provided as information only, and no specific actions are being solicited as a result of it; to the extent permitted by law, no liability whatsoever is accepted for any direct or consequential loss arising from use of this document or its contents.

About SEB

SEB is a public company incorporated in Stockholm, Sweden, with limited liability. It is a participant at major Nordic and other European Regulated Markets and Multilateral Trading Facilities (as well as some non-European equivalent markets) for trading in financial instruments, such as markets operated by NASDAQ OMX, NYSE Euronext, London Stock Exchange, Deutsche Börse, Swiss Exchanges, Turquoise and Chi-X. SEB is authorized and regulated by Finansinspektionen in Sweden; it is authorized and subject to limited regulation by the Financial Services Authority for the conduct of designated investment business in the UK, and is subject to the provisions of relevant regulators in all other jurisdictions where SEB conducts operations. SEB Merchant Banking. All rights reserved.

Fortsätt läsa
Annons
Klicka för att kommentera

Skriv ett svar

Din e-postadress kommer inte publiceras. Obligatoriska fält är märkta *

Analys

Now it’s up to OPEC+

Publicerat

den

SEB - analysbrev på råvaror

All eyes are now back at OPEC+ after the recent fall in oil prices along with weakening crude curve structures and weakening economic statistics. OPEC+ will have to step up the game and give solid guidance of what it intends to do in 2024. If Saudi Arabia is to carry the burden alone (with only a little help from Russia) it will likely need to keep its production at around 9.0 m b/d on average for 2024 and drop it down towards 8.5 m b/d in Q1-24. This may be too much to ask from Saudi Arabia and it may demand some of the other OPEC members to step up and join in on the task to regulate the market in 2024. More specifically this means Iraq, Kuwait and UAE. The oil market will likely be quite nervous until a firm message from Saudi/Russia/OPEC+ is delivered to the market some time in December.

Bjarne Schieldrop, Chief analyst commodities at SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

Saudi Arabia may get some help from President Joe Biden though as his energy secretary adviser, Amos Hochstein, has stated that the US will enforce sanctions on Iran on more than 1 m b/d. 

Brent crude fell 4.6% ydy to USD 77.4/b and over the last three trading sessions it has lost USD 5.1/b. This morning it is trading only marginally higher at USD 77.6/b which is no vote of confidence. A good dose of rebound this morning would have been a signal that the sell-off yesterday possibly was exaggerated and solely driven by investors with long positions flocking to the exit. So there’s likely more downside to come.

In general there is a quite good relationship between net long speculative positions in Brent crude and WTI versus the global manufacturing cycle. Oil investors overall typically have an aversion of holding long positions in oil when the global economy is slowing down. As of yet there are few signs that the global economic cycle is about to turn. Rather the opposite seems to be the case. Global manufacturing fell in October and yesterday we saw US industrial production fall 0.6% MoM while continued jobless claims rose more than expected and to the highest level in two years. This matches well with the logic that the strong rise in interest rates since March 2022 is inflicting pain on the economy with more pain ahead as the effect comes with a lag.

Most estimates are that the global oil market is running a solid deficit in Q4-23. The IEA has an implied deficit in the global oil market of 1 m b/d in Q4-23 if we assume that OPEC will produce 28 m b/d vs. a call-on-OPEC at 29 m b/d. But prices in the oil market is telling a different story with weakening crude curves, weakening refining margins and a sharp sell-off in oil prices.

For 2024 the general forecasts are that global economic growth will slow, global oil demand growth will slow and also that the need for oil from OPEC will fall from 28.7 m b/d to 28.4 m b/d (IEA). This is a bearish environment for oil. The average Brent crude oil price so far this year is about USD 83/b. It should essentially be expected to deliver lower in 2024 with the negatives mentioned above.

Two things however will likely counter this and they are interconnected. US shale oil activity has been slowing with falling drilling rig count since early December 2022 and that has been happening at an average WTI price of USD 78/b. The result is that total US liquids production is set to grow by only 0.3 m b/d YoY in Q4-24. This allows OPEC+ to support the oil price at USD 80-90/b through 2024 without fear of loosing a significant market share to US oil production. Thus slowing US liquids production and active price management by OPEC+ goes hand in hand. As such we do expect OPEC+ to step up to the task.

So far it has predominantly been Saudi Arabia with a little help from Russia which together proactively have managed the oil market and the oil price through significant cuts. Saudi Arabia produced 10.5 m b/d in April but then cut production rapidly to only 9.0 m b/d which is what it still produces. Its normal production is about 10 m b/d.

What has made the situation more difficult for Saudi Arabia is the combination of solid growth in non-OPEC supply in 2023 (+2.1 m b/d YoY; IEA) but also a substantial revival in production by Venezuela and Iran. The two produced 660 k b/d more in October than they on average did in 2022. So the need for oil from Saudi Arabia is squeezed from both sides.

All eyes are now back at OPEC+ after the recent fall in oil prices along with weakening crude curve structures and weakening economic statistics.

OPEC+ will have to step up the game and give solid guidance of what it intends to do in 2024. If Saudi Arabia is to carry the burden alone (with only a little help from Russia) then it will likely need to keep its production at around 9.0 m b/d on average for 2024 and drop it down towards 8.5 m b/d in Q1-24. This may be too much to ask from Saudi Arabia and it may demand some of the other OPEC members to step up and join in on the task to regulate the market in 2024. More specifically this means Iraq, Kuwait and UAE.

The oil market will likely be quite nervous until a firm message from Saudi/Russia/OPEC+ is delivered to the market some time in December.

Saudi Arabia may get some help from President Joe Biden though as his energy secretary adviser, Amos Hochstein, has stated that the US will enforce sanctions on Iran on more than 1 m b/d.

Fortsätt läsa

Analys

More from Venezuela and Iran means smaller pie for Saudi

Publicerat

den

SEB - analysbrev på råvaror

Production in Venezuela and Iran is on the rise and is set to rise further in the coming months and in 2024. Combined their production could grow by 0.8 m b/d YoY to 2024 (average year to average year). The IEA projected in its latest OMR (Oct-2023) that call-on-OPEC will fall to 28.3 m b/d in 2024, a decline of 0.5 m b/d. This combination would drive implied call-on-Saudi from 10.4 m b/d in 2023 to only 9.1 m b/d in 2024 and as low as 8.6 m b/d in Q1-24 if Saudi Arabia has to do all the heavy lifting alone. Wider core OPEC cooperation may be required.

Bjarne Schieldrop, Chief analyst commodities at SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

The IEA is out in the news today projecting peak oil demand this decade with global demand standing at no more than 102 m b/d towards the end of this decade. If so it would imply a call-on-Non-OPEC of only 66.4 m b/d in 2028 assuming that OPEC in general will demand a market share of 30 m b/d + NGL of 5.6 m b/d. The IEA (Oct-23) projects non-OPEC production to average 68.8 m b/d in 2024. That’s already 2.4 m b/d more than what would be sustainable over time if global oil demand is set to peak later this decade. Oil producers in general cannot have a production growth strategy in a peak oil demand world.

The US has decided to lift sanctions towards Venezuela for six months (18 April) as a measure to tempt it to move towards more democratic processes. And if it does, then the lifting of sanctions could continue after the 6 months. A primary opposition election took place this weekend with lawmaker Maria Corina Machado currently holding 93% of the vote count. Venezuela will next year hold a presidential election but fair play seems unlikely with Maduro in charge. The lifting of sanctions allows Venezuela’s PdV to resume exports to all destinations. Bans on new, foreign investments in the oil and gas sector are also lifted though Russian entities and JV’s are still barred.

Venezuela produced 0.8 m b/d in September and indicates that it can lift production by 0.2 m b/d by year and with more rigs and wells by 0.5 m b/d to 1.3 m b/d in the medium term.

Oil production in Iran has been on a steady rise since its low-point of 2.0 m b/d in 2020. Last year it produced 2.5 m b/d. In September it produced 3.1 m b/d, but Iran’s oil minister says production now is at 3.3 m b/d. Iran’s rising production and exports is not about the US being more lenient in its enforcement of sanctions towards Iran. It is more about Iran finding better ways to circumvent them but even more importantly that China is importing more and more oil from Iran.

Production by Iran and Venezuela is recovering. YoY production from the two could rise by close to 0.8 m b/d in 2024. This will lead to a decline in call-on-Saudi oil. 

Oil production by Iran and Venezuela
Source: SEB graph and asessments, Blbrg data and news

The IEA estimated in its latest OMR report that call-on-OPEC will fall from 28.8 m b/d in 2023 to 28.3 m b/d in 2024. If all OPEC members except Saudi Arabia produces the same amount in 2024 as in 2023, then the need for Saudi Arabia’s oil (call-on-Saudi) will fall from a healthy 10.4 m b/d in 2023 to a still acceptable 9.9 m b/d in 2024. Its normal production is roughly 10 m b/d.

If however production by Iran and Venezuela rise by a combined 0.5 m b/d YoY in 2024, then call-on-Saudi will fall to 9.4 m b/d which is not so good but still manageable. But if Iran’s oil minister is correct when he says that its current production now is at 3.3 m b/d, then it is not far fetched to assume that Iran’s oil production may average maybe 3.4-3.5 m b/d in 2024. That would yield a YoY rise of 0.6 m b/d just for Iran. If we also assume that Venezuela manages to lift its production from 0.8 m b/d this year to 1.0 m b/d in 2024, then the combined growth from the two is closer to 0.8 m b/d. That would push call-on-Saudi down to only 9.1 m b/d which is not good at all. It would require Saudi Arabia to produce at its current production of 9.0 m b/d all through 2024.

The IEA further estimates that call-on-OPEC will average 27.7 m b/d in Q1-24. If we assume Iran @ 3.4 m b/d and Venezuela @ 1.0 m b/d then call-on-Saudi in Q1-24 will only be 8.6 m b/d. I.e. Saudi Arabia will have to cut production further to 8.6 m b/d in Q1-24. At that point Saudi Arabia will likely need or like other core OPEC members like Iraq, Kuwait and UAE as well as Russia to join in.

Implied call-on-Saudi. Call-on-OPEC is set to decline from 28.8 m b/d to 28.3 m b/d to 2024. If all OPEC members produced the same in 2024 as in 2023 then call-on-Saudi would fall by 0.5 m b/d to 9.9 m b/d. But if Venezuela and Iran increases their combined production by 0.8 m b/d YoY in 2024 then call-on-Saudi falls to 9.1 m b/d.

Implied call-on-Saudi.
Source: SEB graph and calculations, IEA data

If we look a little broader on this topic and also include Libya, Nigeria and Angola we see that this group of OPEC members produced 11.4 m b/d in 2010, 10.1 m b/d in 2017 and only 5.1 m b/d at the low-point in August 2020. The decline by these OPEC members has of course the other OPEC and OPEC+ members to stem the rising flood of US shale oil production. The production from this unfortunate group of OPEC-laggards is however now on the rise reaching 7.5 m b/d in September. With more from Iran and Venezuela it could rise to 8.0 m b/d in 2024. Production from Nigeria and Angola though still looks to be in gradual decline while Libya looks more sideways. So for the time being it is all about the revival of Iran and Venezuela.

The unfortunate OPEC-laggards had a production of 11.4 m b/d in 2010. But production then fell to only 5.1 m b/d in August 2020. It helped the rest of OPEC’s members to manage the huge increase in US shale oil production. Production from these countries are now on the rebound. Though Nigeria and Angola still seems to be in gradual decline.

Oil production of some OPEC countries
Source: SEB graph, Blbrg data

What everyone needs to be attentive to is that call-on-OPEC and even more importantly call-on-Saudi can only erode to a limit before Saudi/OPEC/Russia will have to take action. Especially if the forecast for needed oil from OPEC/Saudi for the nearest 2-3 years is in significant decline. Then they will have to take action in the sense that they stop defending the price and allows the price to fall sharply along with higher production. And yet again it is US shale oil producers who will have to take the brunt of the pain. They are the only oil producers in the world who can naturally and significantly reduce their production rather quickly. I.e. the US shale oil players will have to be punished into obedience, if possible, yet one more time.

We don’t think that it is any immediate risk for this to happen as US shale oil activity is slowing while global oil demand has rebounded following Covid-lockdowns. But one needs to keep a watch on projections for call-on-OPEC and call-on-Saudi stretching 1-2-3 years forward on a continuous basis. 

In its medium term oil market outlook, Oil2023, the IEA projected a fairly healthy development for call-on-OPEC to 2028. First bottoming out at 29.4 m b/d in 2024 before rising gradually to 30.6 m b/d in 2028. The basis for this was a slowing though steady rise in global oil demand to 105.7 m b/d in 2028 together with stagnant non-OPEC production due to muted capex spending over the past decade. But this projection has already been significantly dented and reduced in IEA’s latest OMR from October where call-on-OPEC for 2024 is projected at only 28.3 m b/d.

In a statement today the IEA projects that global oil demand will peak this decade and consume no more than 102 m b/d in the late 2020ies due to (in large part) rapid growth in EV sales. This would imply a call-on-OPEC of only 26.9 m b/d in 2028. It is not a viable path for OPEC to produce only 26.9 m b/d in 2028. Especially if production by Iran and Venezuela is set to revive. I.e. OPEC’s pie is shrinking while at the same time Iran and Venezuela is producing more. In this outlook something will have to give and it is not OPEC. 

One should here turn this on its head and assume that OPEC will produce 30 m b/d in 2028. Add OPEC NGLs of 5.6 m b/d and we get 35.6 m b/d. If global oil demand in 2028 stands at only 102 m b/d then call-on-Non-OPEC equates to 66.4 m b/d. That is 3.1 m b/d less than IEA’s non-OPEC production projection for 2028 of 69.5 m b/d but also higher than non-OPEC production projection of 68.8 m b/d (IEA, Oct-23) is already 2.4 m b/d too high versus what is a sustainable level.

What this of course naturally means is that oil producers in general cannot have production growth as a strategy in a peak-oil-demand-world with non-OPEC in 2024 already at 2.4 m b/d above its sustainable level.

The US is set to growth its hydrocarbon liquids by 0.5 m b/d YoY in 2024. But in a zero oil demand growth world that is way, way too much.

Call-on-OPEC
Fortsätt läsa

Analys

Reloading the US ’oil-gun’ (SPR) will have to wait until next downturn

Publicerat

den

SEB - analysbrev på råvaror

Brent crude traded down 0.4% earlier this morning to USD 91.8/b but is unchanged at USD 92.2/b at the moment. Early softness was probably mostly about general market weakness than anything specific to oil as copper is down 0.7% while European equities are down 0.3%. No one knows the consequences of what a ground invasion of Gaza by Israel may bring except that it will be very, very bad for Palestinians, for Middle East politics for geopolitics and potentially destabilizing for global oil markets. As of yet the oil market seems to struggle with how to price the situation with fairly little risk premium priced in at the moment as far as we can see. Global financial markets however seems to have a clearer bearish take on this. Though rallying US rates and struggling Chinese property market may be part of that.

Bjarne Schieldrop, Chief analyst commodities at SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

The US has drawn down its Strategic Petroleum Reserves (SPR) over the latest years to only 50% of capacity. Crude oil prices would probably have to rally to USD 150-200/b before the US would consider pushing another 100-200 m b from SPR into the commercial market. As such the fire-power of its SPR as a geopolitical oil pricing tool is now somewhat muted. The US would probably happily re-load its SPR but it is very difficult to do so while the global oil market is running a deficit. It will have to wait to the next oil market downturn. But that also implies that the next downturn will likely be fairly short-lived and also fairly shallow. Unless of course the US chooses to forgo the opportunity.  

The US has drawn down its Strategic Petroleum Reserves (SPR) to only 50% of capacity over the latest years. Most of the draw-down was in response to the crisis in Ukraine as it was invaded by Russia with loss of oil supply from Russia thereafter.

The US has however no problems with security of supply of crude oil. US refineries have preferences for different kinds of crude slates and as a result it still imports significant volumes of crude of different qualities. But overall it is a net exporter of hydrocarbon liquids. It doesn’t need all that big strategic reserves as a security of supply any more. Following the oil crisis in the early 70ies the OECD countries created the International Energy Agency where all its members aimed to have some 100 days of forward oil import coverage. With US oil production at steady decline since the 70ies the US reached a peak in net imports of 13.4 m b/d in 2006. As such it should have held an SPR of 1340 million barrels. It kept building its SPR which peaked at 727 m b in 2012. But since 2006 its net imports have been in sharp decline and today it has a net export of 2.9 m b/d.

Essentially the US doesn’t need such a sizable SPR any more to secure coverage of its daily consumption. As a result it started to draw down its SPR well before the Russian invasion of Ukraine in February 2022. But then of course it fell fast and is today at 351 m b or about 50% of capacity.

The US is the largest oil consumer in the world. As such it is highly vulnerable to the price level of oil. The US SPR today is much more of a geopolitical tool than a security of supply tool. It’s a tool to intervene in the global oil market. To intervene in the price setting of oil. The US SPR is now drawn down to 50% but it still holds a sizable amount of oil. But it is little in comparison to the firepower of OPEC. Saudi Arabia can lower its production by 1 m b/d for one year and it will have eradicated 365 million barrels in global oil inventories. And then it can the same the year after and then the year after that again.

The US has now fired one big bullet of SPR inventory draws. It really helped to balance the global oil market last year and prevented oil prices from going sky high. With 350 m b left in its SPR it can still do more if needed. But the situation would likely need to be way more critical before the US would consider pushing yet another 100-200 m b of oil from its SPR into the global commercial oil market. An oil price of USD 150-200/b would probably be needed before it would do so.

With new geopolitical realities the US probably will want to rebuild its SPR to higher levels as it is now an important geopolitical tool and an oil price management tool. But rebuilding the SPR now while the global oil market is running a deficit is a no-go as we see it.

An oil market downturn, a global recession, a global oil market surplus where OPEC no longer want to defend the oil price with reduced supply is needed for the US to be able to refill its SPR again unless it wants to drive the oil price significantly higher.

But this also implies that the next oil price downturn will likely be short-lived and shallow as the US will have to use that opportunity to rebuild its SPR. It’s kind off like reloading its geopolitical oil gun. If it instead decides to forgo such an opportunity then it will have to accept that its geopolitical maneuverability in the global oil market stays muted.

Net US oil imports in m b/d and US Strategic Petroleum Reserves (SPR) in million barrels. The US doesn’t need strategic petroleum reserves for the sake of security of supply any more. But it is a great geopolitical energy-tool to intervene in the price setting of oil in the global market place.

Net US oil imports in m b/d and US Strategic Petroleum Reserves (SPR) in million barrels
Source: SEB graph, EIA data from Blbrg
Fortsätt läsa

Populära