As of November 5, Eastern Time, U.S. WTI December crude oil futures closed up $2.46, or 3.12%, at $81.27 per barrel. Brent January crude oil futures closed up $2.20, or 2.73%, at $82.74 per barrel. The day before, OPEC+, led by oil-producing country Saudi Arabia, rejected the U.S. call to double crude oil production to 400,000 barrels per day. OPEC+ approved an increase in production of 400,000 barrels per day in December. Obviously, the crude oil market rose in response. So far in 2021, U.S. WTI crude oil futures have risen by about 71%, and Brent crude oil futures have risen by about 62%. Coincidentally, things have changed again.
According to the latest news from Bloomberg on November 6, one day after the OPEC+ meeting, Saudi Arabia announced its official sales price for December and will increase its official crude oil sales price to all buyers next month. price. Priced its main Arabian Light crude oil at a premium of $2.70 a barrel for Asian customers. Analysts believe this will further stimulate global oil prices. Goldman Sachs reports that oil prices are likely to continue their upward trend, which will offset the negative impact of the release of the U.S. Strategic Petroleum Reserve (SPR). The latest data shows that the total amount of oil supplied to the market by the United States last week was an average of 20 million barrels per day, but there are signs that U.S. oil inventories may be facing depletion. According to the chart below from Bloomberg, the United States is reducing strategic crude oil inventories.
According to the latest EIA report, as of last week, U.S. gasoline inventories were lower than those in the pre-epidemic season Average levels were 5 million barrels lower, and distillate inventories were 6 million barrels lower. As of October 29, the total inventory of crude oil and refined oil products in the United States, excluding the Strategic Petroleum Reserve, has fallen to the lowest level since 2014. This is also the butterfly effect of the supply chain crisis and high inflation currently facing the U.S. economy.
This is not difficult to understand. As mentioned earlier in this article, the United States urged and called on Saudi Arabia OPEC+, which is dominated by OPEC, has significantly increased production, and the White House recently warned that the United States will consider a series of tools to ensure that consumers have access to affordable energy prices. However, it is worth pondering that since the United States announced that it would become an energy exporting country in 2018, U.S. crude oil companies have been operating at full capacity and increasing production. U.S. crude oil production capacity once surpassed Russia and Saudi Arabia, becoming the world’s largest crude oil producer. At this time, the U.S. market may face depletion of oil inventories, which will make the above-mentioned U.S. energy plan look like a slap in the face.
The core logic behind this is that U.S. crude oil production capacity mainly comes from shale oil extraction. Since the pandemic, the crude oil production of U.S. shale oil drillers has Production fell sharply in 2020, and production has recovered much more slowly than expected. This also revealed the truth about U.S. crude oil. Not only that, according to a follow-up report by the US financial website zerohedge, the shale oil production capacity innovation in the United States is a Ponzi scheme for US oil. Many people are often confused by the superficial crude oil production capacity, but ignore the cost of shale oil extraction in the United States. Still surprisingly high. At the same time, some U.S. oil companies are facing huge debt problems.
You know, the shale industry is going from Class 30 to Class 60 to Class 70, which requires more pipes, water, sand, fracking chemicals and, of course, money. Several shale companies in the United States have hidden their debt woes from global investors by using highly technical jargon and describing various exciting stories. For example, in order to exploit high-cost shale oil, the US company Continental Resources accumulated more than US$5 billion in debt from 2010 to 2017.
At the same time, according to the operating cash and capital expenditures of some U.S. oil producers, capital expenditures (brown line) are still higher than operating cash (blue line) ), even with oil prices above $100 (in 2013-2014), the shale industry was still spending more than it was profitable. Because of this, many energy companies in the United States that have invested in shale oil technology have experienced severe asset shrinkage and even become insolvent. The U.S. oil Ponzi scheme may also be exposed.
An analysis by Kalinish Energy Consultants believes that by 2023, the United States will have There is $240 billion in long-term energy production-related debt maturing, and at least about 90% of that is related to shale oil, with a significant portion coming due at the end of 2019. The above are all due debts, not all debts.
Analysts say that the U.S. shale oil industry may ultimately have to pay 9 billion barrels of oil We will use the production capacity of rock oil to pay off all debts, which is almost equivalent to the production capacity in 10 years. This all shows that the actual profits of the U.S. shale oil revolution may be peeled off layer by layer. Zerohedge believes that these are all U.S.An example of “Ponzi finance”. These signs have revealed to us the truth about the U.S. oil scam, and the fig leaf of U.S. crude oil may have been unveiled. This further explains why, after becoming the world’s largest oil producer, the United States is still highly dependent on crude oil supplies from Saudi Arabia and other oil-producing countries, and even faces the risk of depleted inventories.
Judging from the fact that Saudi Arabia first rejected the U.S. proposal to increase crude oil production and then raised oil prices, Saudi Arabia has begun to say no to the U.S. economy, which also makes the U.S. The economy seems to be doing something unexpected. We know that the Saudi economy has been following the United States and its dominant dollar system for more than half a century. It was the petrodollar agreement signed between Saudi Arabia and the United States in the 1970s that formed today’s currency structure in which the U.S. dollar dominates oil and other commodity transactions. However, as the global oil market continues to change and the U.S. dollar remains dominant for a long time, things will change.
It is worth noting that, according to a report quoted by the US media AXIOS a week ago, the US Congress has begun to launch a lawsuit surrounding the monopoly of the Saudi-led OPEC in the international crude oil market. In response to N-OPEC’s legislative actions, some people familiar with Saudi Arabia’s energy policy said that if the United States passes NOPEC, it will sell oil in currencies other than the U.S. dollar. They said that “the U.S. dollar is their core option.”
Not only that, Saudi Arabia once announced that it might terminate the petrodollar agreement and sell oil without using dollars. This shows that Saudi Arabia has directly shown its sword to the dollar. In addition, with the de-dollarization of global sovereign cryptocurrencies in the ascendant, Saudi Arabia announced a few months ago that part of the economy and trade with the United Arab Emirates will be conducted using cryptocurrencies jointly developed by the two countries. And something even more unexpected happened again.
The latest data on U.S. debt released by the U.S. Department of the Treasury on October 19th (official data on U.S. debt is delayed by two months as usual), Saudi Arabia is the 15th largest overseas holder of U.S. debt , in the nine months from November last year to August this year, there was continuous selling of U.S. Treasuries. Except for a slight increase in holdings in individual months, U.S. Treasuries were sold continuously for seven months, with a cumulative total of 135% sold. Billions of U.S. dollars in U.S. Treasury bonds, the cumulative scale of selling has reached about 10% of the country’s total U.S. debt holdings.
Considering the three pillars of the U.S. economy: oil-dollar-U.S. debt The habit of monopolizing commodities-currency-bonds over many years of cyclical organic combination, coupled with a series of phenomena of the Saudi economy saying no to the U.S. economy and the U.S. dollar, requires people to tie the bell. The McGill International Review columnist believes that currently, the energy supply market The changes seemed to indicate that the petrodollar agreement between the United States and Saudi Arabia may end early. (End)
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