SPR

Kurdwadat

API Inventory Moves 6/9 (full version) Crude -9.119 million (exp. -3.4 million) Gasoline -1.191 million Distillates +1.3 million Cushing -1.125 million SPR actual -7.9 million

amanj41

Feels more like manipulation or SPR releases but idk shit

9tacos

Wait until SPR runs out of oil lmao

TTRango

SPR report is also tomorrow right?

DressPrestigious7088

It’s called the art of the deal. People won’t get it if they watch fake news CNN. He’s single handedly bringing down the price of oil, weakening Iran’s leverage even with the strait closed. He released oil from the SPR, weakening Iran’s leverage. That’s exactly what an SPR is there for. This is what we call as strategic masterclass.

jrex035

>The flip argument is that some of those sources of oil are temporary (SPR) and indefinite. Not some, the vast majority. Oil production from outside the Gulf has been miniscule since the war began (less than 300k). China has reduced imports by eating into commercial crude oil inventories and more importantly, into refined product inventories. Their refineries have dramatically slashed throughput by almost 2m bpd, requiring big draws from gasoline, jet fuel, diesel, etc inventories to make up the difference. The biggest issue with the market today imo is that there's little to no insight into global refined product inventories. Crude oil tanks have floating tops that can be measured by satellite imagery, refined products for the most part do not. Few countries release public data about the status of their refined product stocks as well (Japan coincidentally stopped releasing that data months ago). As a result, demand for global crude is declining as countries dial back their refinery runs by eating into their refined product stocks instead. But again this is inherently unsustainable. The world is buying time for the Strait to reopen, but there's still no sign of this whatsoever

tachyonvelocity

Except there isn't "less oil available," because demand has dried up. China has literally seen the war coming and bought up all the oil before the war even happened, now they're sitting on a giant SPR and don't need to buy much oil anymore. You could see this in pre-war Chinese oil flows.

creemeeseason

Lots has been written about this, but the gap in Hormuz supply has been cancelled out by pipelines as well as SPR releases. China has somehow massively curtailed imports. On top of that, more oil is getting out of Venezuela. There is plenty of oil available on theal market and most traders don't want to go big into oil and get blown up by a truth. The flip argument is that some of those sources of oil are temporary (SPR) and indefinite. At some point they dry up, we just don't really know when.

Provolone-Jones

The oil futures market informs the physical market, so don’t let anyone tell you the paper price is irrelevant. We’re giving away our SPR for practically free at this point.

pink_ego_box

Bessent shorts are financing the rush on the US strategic reserves by the rest of the world A couple years of forced buying are incoming just to refill the SPR It's not going back to 60

TheoryInttro

The market will keep on huffing the hopium on the most epic bender of all time until the DoD puts a hard stop on SPR release due to reaching military preparedness minimums. Or the salt caverns collapse because the operational minimum was reached and nobody informed DoD because they knew they'd get fired for reporting bad news. either way, the bender will continue until the supply is cut off.

big-papito

I feel the same, but I am also worried that this is true. Oil has been low because of SPR, some demand destruction, more flexible supply chains, and perhaps manipulation. It's a kind of thing that experts can be wrong about until they are right. Most commodities watchers I have heard did not say the danger was imminent - this is about the timeframe shit hits the fan and then takes months to recover and only once Hormuz is fully open, accounting to them.

Campity

SPR output, and I assume it’s because of the lack of Iranian response after a refinery of theirs was hit.

Provolone-Jones

Oil bears will point at the price of oil and say “look, losing 10-20% of global oil supply clearly isn’t a big deal.” While we still have SPR to draw from, they’re technically not wrong. BUT they are dumber than fuck because there is no articulable solution for what happens when shortages hit beyond drastic price increases. 🥭 successfully jawboned away the risk premium that would have allowed the economy to slowly adjust to our coming reality, which makes oil bears look smart while simultaneously accelerating the oil shortage timeline. Anyways, I forgot to put the fries in the bag.

jackpearson2788

We have the SPR for a reason

fan_of_hakiksexydays

If you wanna know how out of touch this market has been.... Oil futures were expecting that oil would be back down in the $70s by now, war would be over for more than a month, and oil tankers from the Gulf and Strait of Hormuz, would be filling up Texas terminals and refilling SPR reserves right now, after their 5 week journey across the globe.

MarsTellus13

Agreed though I think the difference here is the experts are being roundly ignored. I am FAR from a 'let the market decide everything' guy but when supplies are cut, releasing reserves while allowing society to burn through your savings is the worst thing you can do. If the world didn't have an SPR, prices would already be insane and demand would be falling. Instead they're just like...a little bit higher while the world pretends supplies can be restored in a matter of days. I'm far from an expert but see no rational reason to think prices at the pump should have fallen over the last month with no positive change on the ground. The fact that they have is infuriating.

Plane-Try-6522

Your definition of "critical" level is "cavern structures"? The SPR is closing the level where the oil reserves must be maintained for emergency services and military operations.

Smart_Money_HQ

The real critical level for the SPR is 100 to 150 million barrels because the storage caverns will collapse. At the current pace the U.S. will reach this catastrophic floor by December 2026. We have a couple of months before the panic starts, given tgere is no resolution to the conflict

Plane-Try-6522

Done? I'm often amused by the degree to which people ignore the crucial signal at the heart of the risk factor. SPR inventory is closing in the minimum operating level. Mid - June is when US driving season kickstarts. The massively underpriced oil paper market artificially cheapens crude prices which continues to accelerate the depletion of the salt cavern in which the oil reserves are contained.

Technical-Reach9244

Dont worry you reegards Tomorrow's nothin. Jun 15-20: US forced to announce SPR emergency release or rationing Due to depletion of SPR below DOD thresholds. This is when the real fun starts.

jrex035

>Certainly can last 6 months of that easily. 6 more months of the status quo would be disastrous, we'll have full blown product shortages in much of the world before then. The system isn't designed to be run down to those levels at all and I expect we'd see US export bans before then (which would have disastrous results for much of the world). >Curious though, what is your price target for front futures end of June? By the end of June I expect we'll hit over $120 Brent again, though perhaps not persistently. I expect the floor price to continue rising the longer this isn't resolved and the more storage tanks start running dry. Jawboning and SPR releases have kept prices remarkably low all things considered, but this isn't going to last forever.

jrex035

I don't mean to be rude, but I have no idea where you're getting these numbers from. >We're still even above 2023 lows. We're literally days away from multidecade lows, the lowest since the SPR was first being filled in the 80s. Last EIA report showed us at 357m barrels and we're draining the SPR at about 1.3m bpd (the fastest on reford). >They've released about 20k a month of the 415m It took a while for the releases to begin, they didn't really start until April and have been rapid since than, dropping us from 415m to 357m in just two months, with the pace accelerating in May. Also worth noting that they *can't* just drain the SPR to zero for a variety of reasons. >assuming they don't care about our energy security many years from now they can go that low. They need Congressional approval to drain the SPR past the ~250m barrel mark. That means another 4-5 months at the current pace. Regardless, the US SPR isn’t the only one keeping a cap on prices. Japan has released about 80m barrels of its own SPR already, down from about 360m to just 280m. Those are the only two fully transparent SPRs also, but China is drawing down its own SPR at a rate of probably at least 2m bpd as well. What's important is also the speed of the decline in global refined products as well, as many countries are drawing down commercial and strategic stocks of things like gasoline, diesel, jet fuel, and fuel oil at an unprecedented pace. All of this is to say that we absolutely do not have 2 years to resolve this crisis at all. Prices will continue to grind higher the more stockpiles are depleted as well, causing different issues.

FlyingCats17

He reminds me of a late 90's phone psychic that can always focus on what he gets right and never what he gets wrong. He recently said high oil is bullish for the US economy which is just moronic. Oil & gas are such a small % of GDP today and high oil will drive inflation and interest rates up. When the SPR drops to critical levels and oil spikes, the market will not be going up.

Sufficient_Habit5091

Sorry didn't see your comment earlier. >The global economy implodes well before this crisis lasts 2 years. >The key thing keeping a lid on oil prices are global SPR releases, especially the US, Japan, and China, but those wont last even another 6 months at the current pace. That's not true though? They're not releasing that fast. We're still even above 2023 lows. They can release a ton more before they truly have to stop. They've released about 60k over 3 months of the 415k or so of recent peak SPR reserves over the course. Of course that doesn't mean this admin should go that low but assuming they don't care about our energy security many years from now they can go that low.

OldWonder5865

Bers think oil is gonna spike when the SPR runs dry but we’ve been restoring the whale population for this moment for 50 years

jrex035

Correct, but that won't last forever either. They're draining their SPR and refined product stockpiles to help keep a lid on global prices. The world has taken extraordinary steps to buy time. And what does Trump have to show for the 100 days bought by these efforts? Diddly squat. We're far from a deal to end the war, in fact it looks like the hawks are winning Trump's ear at this point as we're letting Israel occupy 1/5th of Lebanon and bomb Beirut (Iranian red lines), openly floating the idea of using Iranian frozen funds to pay for Gulf State reconstruction (Iran demands return of those funds to even begin reopening of the Strait), and "Project Freedom" is continuing on the downlow causing daily strikes between Iranian and US forces that have spilled over into attacks on Kuwati, Bahrainian, and Emirati soil.

Halbaras

Fuel prices are going to shoot up again if there's not a deal by the end of July. There are two reasons oil isn't currently at $150 a barrel. One is that the US and other countries like Japan are releasing oil from their very finite SPRs to keep prices lower. The other is that China has largely stopped importing oil and is drawing down their own massive reserves. Either the US SPR getting dangerously low or China resuming buying on the market is going to violently break American attempts to suppress prices. Since Iran agreeing to open the Strait won't instantly restore normal traffic volumes (as oil tankers cannot teleport), Trump has a rapidly shrinking window to make a deal before he loses his ability to gaslight markets into thinking everything is normal.

jrex035

The global economy implodes well before this crisis lasts 2 years. The key thing keeping a lid on oil prices are global SPR releases, especially the US, Japan, and China, but those wont last even another 6 months at the current pace.

Fantastic-Bedroom81

Option pricing is usually pretty efficient so if you're seeing something different than market, might be worth double checking your assumptions about SPR releases and demand projections The $3 premium seems reasonable for that strike but remember these commodity options can get wild with geopolitical events - one headline about supply disruptions could make this print or kill it completely

TheStrat

Yea the market really priced in a way earlier open with 🥭 saying a deal is coming 🔜 , but now I think we are seeing that the SPR drain is getting prettty low and inflation fears increasing. Now market has to price in rate hikes instead of rate holding/cuts with positive job market numbers. Next week inflation number probably won’t help. So yea def need some consolidation and repricing as we went definitely parabolic way to fast and probably a lot of people were using leverage or buying options. Easy for the market algos shorts to sell off and cash in on some stop losses. I want to see a proper consolidation support before another leg up, no just a buy the dip constantly, which isn’t healthy for a proper market. Trillion dollar market cap shouldn’t be trading 10-20% each day (MU, AVGO)

Opposite_Day_9771

Isn't this a classic supply and demand situation? New mega IPOs issuing more tech shares. The money in the market has to spread out to cover these new shares. Hence, other tech stocks have to go down to cover the spread. On top of that, rising oil prices due to SPR emergency release running dry. 401K contribution going down to cover living expenses. Overall less money in the market with more tech shares to buy.

stuntondeezh0es

Take what I say with a grain of salt, but I saw a post that the SPR levels have hit the Biden lows as of today June 6. I’m more inclined to think this is the reason, combined with a rate hike. The reason I say this is because precious metals, crypto, oil, AND stocks all went down today. The DXY went up about 1% and the real fear that a recession is coming is affecting the market. SK Hynix got obliterated in their last trading day and kept going in AH. Despite what Mango Unchained tweeted, reality is finally settling in.

Solid-Fix-3772

Oil is in a very tricky spot right now, you’ll only have to wait a couple more weeks until the SPR starts getting real low and if no deal is made then things are going to get ugly. Anyway oil and pipeline calls have me sweating

Opposite_Day_9771

Passive index investing contributed to the bubble along with the fed always printing money to bail institutions out. Is this going to happen again? Reasons why it may continue to go down: circular investing, Hormuz remains closed and SPR running out in a few weeks, central banks selling US treasuries to buy oil, inflation is going up and people’s spending habits curtailing based on (HD, LOW, MCD), Q1 earnings based on pre-war data, more shares to buy due to multiple IPOs that would dilute total number of outstanding shares traded for the tech sector, and the bond market with rates going up due to everything above.   Why would it rebound? AI spending because AGI is nigh. If you’re not first, you’re last. Super intelligence would wipe out their businesses so they’re all in. The government would nationalize the first company that achieves this goal due to national security. What am I missing?  

Leveraged_Lots

Even if we set aside congressional limits on the SPR, because of emergency carve-outs and Trump's history of ignoring the rules in general. There's still hard limits on what is physically possible, the SPR can't function below a certain level, the salt caverns that house the SPR face structural risks if emptied too much, there is no getting around that.

SlugsPerSecond

Are you sure about the congressional approval for SPR drawdowns below 234m barrels? §161(d), 42 U.S.C. §6241 gives the president unlimited drawdown authority under a "severe energy supply interruption" which is exactly what Trump caused. Trump is going to drain the SPR dry.

Many_Estate1581

My question is this: we are currently entering summer, which has higher oil/gas usage across the US. Would we be expecting a greating SPR draw to compensate, pushing the red line up, or would we be expecting oil prices to rise due to increased demand without the production

RandomRocketScience

Nice, we've gotten half a days supply out! Oil back to $70, crisis is over boys! Forget the draining SPR reserves, the dow is at 50k!

No_Body_8195

Kicking the can down the road this way will only make the eventual repricing more painful and rapid. Once the US and Japanese SPR start to run dry we'll see Trump begging for a deal. Until then he thinks he can financially engineer his way to a deal that will eventually destroy Iran.

No_Body_8195

Personally, I suspect the US government itself is selling down the SPR to keep prices artificially low.

WrexyWrex

US crude exports in May were up 2 Mbd y/y (!). Corpus and Houston account for \~85% of exports but fell m/m in May. Instead we saw 1.6 Mbd from less prolific ports exporting a lot of SPR and Gulf of Mexico/America crude. And don't forget Alaska. [https://x.com/mattvsmith01/status/2062518242388721897?s=20](https://x.com/mattvsmith01/status/2062518242388721897?s=20) i wonder why ceasefire keeps failing lol

NonimiJewelry

Oil is down because the government is using SPR drawdown to sell futures contracts

stewie3128

Well to be clear, that Sandia report doesn't say the SPR is going to collapse at the 240-million-barrel mark. It just points out that pumping water in to draw out oil can warp/damage individual caverns, meaning the DOE has to track them on a case-by-case basis... So, a legit engineering concern, but not a 240 million barrel cliff claim by any stretch.

Opposite_Day_9771

Automatic investing with people buying index funds from 401K contributions every two weeks is why the momentum is strong. Buy the dip because the fed will bail you out. It'll work until it stops working. High oil prices when SPR runs dry will cause people to stop contributing to their 401Ks in order to pay necessities. Can the fed print more money when inflation's already high? I say yes but they need an excuse so the market has to tank first. I'm expecting helicopter money like Covid again.

Opposite_Day_9771

You're not worry the war isn't ending and the supply chain across East Asia isn't going to break? SPR oil has six weeks left. Countries used their reserves thinking it's a temporary disruption and everything will be restored. These are physical assets that you can't print out of thin air. I'm guessing by the end of June is when people realize this is the status quo. It could get worse. If Israel with boots on the ground can't get rid of Hamas from Gaza that's 25 miles long and 5 miles wide after years, how can the US topple Iran with air power only? Iran is only 4,515 times bigger than Gaza. Invest wisely.

Full_Cash6140

Not until shortages arrive. Still too much SPR being dumped and this retarded market thinks the war is what matters, as if Trump can just taco the strait open.

Responsible-Milk-259

Less rumor than fact. Trouble is, they either have to buy to cover later, or else draw from SPR to deliver, which only drains the tanks faster. It all depends upon how long one expects the Strait to remain closed. If you believe it’s opening next week, short oil. If you believe we’ll still be ‘negotiating’ in 2-3 months time (if indeed a hot war hasn’t restarted by then), you’d want to be long. It’s a bet on geopolitics more than anything else.

Maxfunky

> The US has plenty of oil to weather the storm. If this storm lasts another 2 months, shit gets real complicated in ways a lot of people haven't properly considered We currently have about seven more weeks until the SPR falls below 300 million barrels. At point, there are structural integrity issues to consider that make extraction of anymore oil perilous. Fresh water would have to be injected to float the oil up, and these are salt caverns. Fresh water will dissolve features of the caverns and threaten their structural integrity. .

stewie3128

"Total exports” actually includes crude plus refined products and other petroleum liquids. Crude exports alone were 5.874 million barrels per day, petroleum product exports were another 7.726 million barrels per day. I'm curious about the source of your claim on that the caverns collapse below 240MM barrels - both because I've never heard that, and because they get oil out of the rock salt SPR caverns by pumping water underneath the oil to push the oil upward.

One-Sweet1810

The SPR draw numbers are wild when you put it like that - we're basically exporting almost everything we produce while burning through reserves at emergency levels Your timeline on the operational limits is pretty sobering, especially with Iran clearly playing the waiting game knowing they've got leverage. Even if something breaks loose diplomatically the logistics alone mean we're looking at months before any meaningful relief What's your take on how the options activity you mentioned might snap back to futures once this volatility settles? seems like that could amplify moves in either direction pretty dramatically

Leveraged_Lots

Alright that's cool but in roughly ten weeks when there is no more SPR, what exactly do we do?

NCITUP

Not sure. This is just for the US. Also note that if Oil goes lower in price the SPR inventory will go down faster most likely. Higher oil prices and there should be less demand therefore less of an inventory drawdown from the SPR. I would imagine that the situation for countries like Japan, South Korea, Philippines, Australia, New Zealand, India, and China may be worse but there are a lot of unknowns. How much oil are the Gulf countries (including Iran) able to go through different underutilized pipelines or other land routes. I had seen something that showed Iran was shipping a lot more of their oil through Turkmenistan and into China that way. I also saw reporting that some oil (maybe around 25% of what had been going through the Strait before the war) is bypassing the strait of Hormuz via a pipeline from the UAE to Oman, and a pipeline from East Saudi Arabia to western Saudi Arabia on the Red Sea. Are countries willing or able to train with Russia again? Is the US going to sell more of it's oil now? Lots of unknowns

Budget-Push7084

It seems very unlikely to me that future administrations will have the political will/mandate to ever refill the SPR

Icommandyou

Considering levels of SPR everywhere don’t understand why paper oil is being manipulated like let it go lol, use that money to buy MSFT instead plz

borkdpasito

Oil data prints in 45 mins. Accelerating SPR draw or Cushing running critically low could rip oil even harder

Report_Last

SPR is being seriously damaged when it is drawn way down, it has a finite number of cycles of fill and drain, it will take billions to repair, plus the capacity in the future will be diminished.

KeyInstruction641

*US SPR at 40 year lows. Dumb ass says he doesn't care about the price but releases oil from the SPR? There is a lag but that shit is gonna start hitting before year end and it won't be pretty. Without the strait open we're even going to be affecting the Christmas ordering season soon. It's beginning to smell bad. Real bad.* *Here litte Johnny, look what I got you for Christmas.* **An Ai bicycle.**

tcote2001

So under current conditions, we are looking at roughly late July through September 2026 as the window where markets would start getting nervous about SPR levels. That’s a lot sooner than many people realize. That said, the bigger trigger for a price spike may actually happen before the SPR reaches those levels. I think this Summer is going to be a cluster F.

chevronphillips

The SPR is still above (but not by much) the Biden era low of 343 mb. And oil prices when it hit that low in early 2023 was around $73. By that comparison oil is priced high currently. 🤷‍♂️

mathieu007

OP is asking the right question, but I wouldn't play it with straight USO calls. If I had to pick one oil ticker here, I'd start DD with SLB. If crude is being held down by paper barrels and SPR releases while real supply stays tight, the cleaner trade is the service company that gets paid when producers need to keep drilling and maintaining output. The risk is obvious: if demand rolls over or oil keeps chopping sideways, SLB gets treated like cyclical trash and won't give you the instant dopamine of crude calls. [https://catsofws.com/](https://catsofws.com/) SLB is the one I'd dig into; chasing front-month oil feels like fighting the casino directly.

MarioCurry

At least from the graph it seems like over the last 40-50 years it only raached lower levels during COVID tho (at least the levels of the SPR). Meanwhile the trend of crude oil consumption seems to be the opposite (even tho it's rising slowly).

No-Recording9634

SPR draw down to critical levels.

Prematurid

"It will take maybe a month to resume production and SPR reserve is set to hit dangerous level mid August." Really? Might want to read up a bit before commenting. Patrick Boyle has a video on the topic.

-GME-for-life-

They’ll ban keywords like SPR and straight up redefine how the numbers are measured. Depressingly standard procedure at this point

Extrosity

At the current pace, at least for the US market, we are doing 1.23/m barrels per day from the SPR reserves, which has us holding over until February of 2027. Until we hit the floor or deal with congressional adjustments. Oil is extremely price inelastic. We are experiencing that in real time. A 5% drop in oil demand. demands a 50% price increase. Look up the formula for PED Elasticity. Our demand is very real; however, the price has gone up to reflect the reality of the market as we are actively using it. The paper market is just betting that the Middle East will resolve it through alternative supply routing before it becomes that big of an issue. Yes, 20% of the world's oil \*was\* going through the Strait, but now with that dropped to a fraction of that, oil producers are diverting to other ports to meet consumer demand. I'm more so just pointing out the big players in the game are incentivised to keep oil low, at the risk of their own economies. The Middle East can almost divert the entire supply shock on their own with existing infrastructure, with other parts of the world moving to meet the remaining demand that's opened up. Global reserves are being used as a giant buffer machine while everyone works to turn the taps on, and the big money in the market knows this better than anyone. They know that if the Saudi's want to risk their entire economy, then oil will go to $120 a barrel and domestic oil in the US and surrounding areas will continue to experience a boom. It's then in our best interest to keep oil prices high to protect US investment in oil, otherwise, our oil companies become overleveraged on expansion. US Oil companies & the Middle East have learned that a stable OIL market is better for everyone, and it's a whole lot cheaper for everyone to keep stability than to swing trade oil and crash each others markets.

Budget-Push7084

Typically we draw heavier during driving season, not heating season. Either way, we’re at max SPR draw rate. It can only slow or hold steady from here. An increase in refining runs or exports would create additional commercial draw rather than SPR draw.

Consumption2Wombly

If (or when) any of this SPR stuff starts hitting the main stream discourse, the admin will shut down the reporting of the numbers. Just like the job market numbers. Just like the inflation numbers.

Budget-Push7084

SPR currently has 365mmbbl. Tank bottom is supposedly ~150mmbbl. We’re draining ~9mmbbl/week. ~20-25 weeks until SPR hits tank bottom given current draw rates, IE December/January. That’s still quite a bit of runway.

CouldBeLessDepressed

The general consensus I'm seeing on r/oil is that we can only draw down the SPR so quickly anyways. Which means our total operating stock is still dropping even with SPR. Which means by July we're starting to approach "operational minnimum inventories" and by September some places are going to hit those minimums. It's not just that we can't suck the SPR caverns dry, we also have to stay above a certain level for everything to even be able to continue operating. By the time we run out of SPR, we're already redlined everywhere for several months. AND, and this is also a huge IF.... so far current draw down is going at a rate that we'll hit the 240-ish million barrels that was authorized from the SPR to begin with in roughly 12 weeks. Beyond that, it becomes a matter of national security because we have to maintain a certain level to guarantee that the military can still physically operate. But I say IF because this congress and Kegsbreath are just as likely to let us continue to draw down past the limit. So, if we're still drawing from SPR by Feb-April of 2027..... holy shitballs. Even as we approach the authorized limit, this stuff is stored in caverns under ground. We're already approaching the operational limits of at least 1 cavern (can't recall the name right now sry sry), and we can't draw down too far or else we destroy the SPR entirely- meaning we'll have to spend billions to rebuild/repair it. All of this is why the folks obsessed with oil over there on the oil subs are looking at July-September of this year before shit starts to get real. And this is all assuming that even more supply isn't lost to war or another rogue cat-5 hurricane hitting the gulf of Mexico. No matter which way you slice it, the price of oil being where it is is tantamount to collective seppuku. No one is acting like there's a problem. And the time for anyone to buckle up and batten down the hatches is rapidly dwindling down. We actually acted like we wanted to survive with less than half this level of disruption hit in the 1970's and we STILL had like a decade long recession. But at the rate we're going now we're basically pressing down on the accelerator and steering straight into a concrete wall. When it hits.... it's gonna feel bad. Bad bad.

earthwalker19

good writeup. If reserves drop too low military readiness will be impacted. Tapping into SPR may slow down prior to reaching the bottom of usable oil for readiness considerations. but then again considering who's running the show, maybe not. full gas into the wall

fourbutthick

Not sticking up for this administration but I wanted to put some facts in this post. War started Feb 28th and the administration didn’t touch reserves until end of March. Reserves sat at 415 million barrels until end of March. After two months down to 365 million barrels. Source: Eia.gov weekly us endings of stock crude oil in SPR. However post is probably accurate forecasting us being fucked since a bunch of Middle East infrastructure was destroyed and that shit takes awhile to come back online. On top of countries reserves dwindling on top of Trump has no clear plan to escape this mess he’s made. Also we don’t have to hit zero there is a floor we need to maintain to keep the whole system running so the math is like… we have until end of year ish to figure our shit out.

Responsible-Milk-259

Agree. There will come a point when SPR will be prioritized for national security rather than buffering the oil price. At that moment, we’ll see the true effect of the deficit in the market.

BrutallyPretentious

For those curious: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCSSTUS1&f=W We attacked Iran on 2/28. On 3/6 we had 415m barrels in reserve. 5/1 - 392m, 5/8 - 384m, 5/15 - 374m, and on we had 5/22 we had 365m. We're likely around ~350m now. Using the numbers from the 22nd we're down ~12% of our initial reserves in ~3 months, but this is somewhat misleading considering that the levels didn't start declining significantly until mid April. Calling it a 12% decline in 6 weeks is a bit more accurate given that we waited to start pulling from it for a while. If I'm right about the ~350m number, we're closer to 15.5% in ~6 weeks. Assuming nothing changes in Iran or with our consumption and ignoring that some of the oil needs to stay in the reserves for them to function at all, the US is on track to run out of SPR oil between early February and early April of 2027 depending on the datapoints you use for the projection. So... Calls I guess?

SD-Buckeye

The federal oil reserve is printing oil out of thin. You just print oil from the SPR whenever you need oil. We can print however much oil we need. Everyone needs to stop worrying.

redux44

1. Big release of oil from reserve and commercial inventory 2. Massive drop (5-6 million) in Chinese import of oil. They had a massive reserve and are going through it. Market keeps expecting some end to the war any day now which means by the time strait opens and production rebegins they wont hit critical level of supplies. It will take maybe a month to resume production and SPR reserve is set to hit dangerous level mid August. So about 6 weeks left for some agreement between US and Iran.

itsnotshade

Spot prices are a little higher, but in general it’s because SPR and commercial reserves are being used and we’ve seen Asia pull back their consumption while they’re running on reserves. China in particular has a massive amount of reserves that are more than most of the world combined. We’re also expecting a deal sometime soon. Once you believe the relief is coming you can plan accordingly with a level head with what you have. The panic buying because it will “inevitably go up” stops happening. I personally think we are severely underestimating the risk of Trump blowing this off for the rest of the year or the IRGC overruling the secular government, but it won’t matter until shows in the data.

RandomRocketScience

SPR releases. We will need for them to slow down a bit for actual price discovery to happen. Give it 4 weeks until the huge drains stops.

KevtheKnife

Check out the rate of release of the SPR……

Responsible-Milk-259

Irrelevant how many are physically settled. The point is, once taking a position, say selling into the market to suppress prices, one is obliged to either buy back the short (forced prices up later) or else physically deliver. There is no ‘free lunch’ when manipulating prices down, physical oil HAS to be sold, or you just get a dump and pump. Part of that is due to a market in backwardation as the supply shortage is expected to be transient, with nearer delivery fetching higher prices. Also, oil has always been this way, different prices in different regions, although spreads are now extreme because shipping costs are much higher. Oil will leave the US for other places, it just takes time to get those deals done. Rubio was in India selling US oil, then Australians are buying US distillate… the US oil market isn’t an island. Again, I agree. Price suppression by selling futures and delivering from SPR is happening now as the government understands what will happen otherwise. All the same, this cannot go on indefinitely and a line must be drawn, as the only thing worse than high prices is empty tanks and Americans not being able to fill up at the gas pump. Suppressing the price benefits the world, whereas a time will come when America can only afford to protect Americans. We’re getting close.

stuntondeezh0es

Yeah the SPR levels may be the only thing to finally kick this shit awake

Responsible-Milk-259

Sorry, what is ‘paper oil’? I love that this term gets tossed around, yet when discussing futures that are physically-deliverable, it demonstrates that one has no clue how futures markets operate. The NYMEX contracts are physically-deliverable; it is what gives them value. Do you remember the -$38 oil in the pandemic? People assumed they were trading ‘paper’, right up until it materialized into 10’s of thousands of barrels of physical oil they were about to be forced to accept… they had to PAY people to take that oil. I think there is no better demonstration that ‘paper’ oil is a figment of the imagination, as paper can surely be worthless, although it cannot cost millions to dispose of a few sheets of the stuff. Now the above notwithstanding, the oil market can be suppressed (as it has been) only by drawing down the SPR. You’re right that the plan is to suppress it for long enough to reopen the Strait, bringing supply back sufficiently that the mild demand destruction at $90 is enough to have a market in equilibrium. Good in theory, but if the Strait opening isn’t imminent, we need a price near $150 for adequate demand destruction and to encourage new supply to come online to reach said equilibrium. Long oil at these levels is basically a bet on the Strait not opening for months. Anyone who believes it will open tomorrow… yeah, you definitely don’t want to be long.

Ok_Location_1092

Iran would prefer war to capitulation. Oil will being us back to reality. It’s all about headlines. Once the SPR headlines get loud enough, down we go.

ReBoomAutardationism

USO is trading right at the 50 day moving average. WTI is in a trading range. What do you think will happen if the SPR release rate is lowered and the Euro-dweebs bid for the oil?

danonino80

The muted reaction has two layers worth separating. First the structural part. The US is a net oil exporter now. The SPR can absorb temporary shocks. OPEC+ has significant spare capacity sitting unused. Hormuz closures historically lasted weeks, not months. Even a serious supply disruption reroutes through alternative supply chains in 60 to 90 days. The 2008 reflex of "oil spike equals recession" is outdated math at this point. Second the behavioral part. Most active traders sat through 2022 Ukraine, 2023 Israel Hamas, 2024 Iran tensions, and learned the same playbook. Spike on headlines, fade within 2 to 4 weeks. The people who panicked sold once and watched Nasdaq run 25 percent the year after. Those sellers are gone. There just is not much selling pressure left at current levels. That said, the TACO trade is not bulletproof.

Responsible-Milk-259

That’s my point. The SPR cannot be drained to zero so there ALWAYS WILL be gas. The US government aren’t irresponsible. The only thing worse than expensive gas is no gas.

Responsible-Milk-259

Agree. Global powers and their efforts are why oil isn’t much higher. SPR drawdowns are the biggest since records were first kept in 1982. Japan has released 10’s of millions of barrels, even China has come to the party. You’re right that oil is essential, new supply will come along, but suppressed prices aren’t encouraging that to happen. The cure to high prices is always higher prices in commodity markets, yet we have a spot price manipulated lower due to huge drawdowns and a futures curve in backwardation rather than contango, so one can forgive oil companies for not scrambling over each other to get more supply online. Further to the above, low prices not only disincentivize new drilling, but it also doesn’t dampen demand. Higher prices will achieve both and the market will reach equilibrium much sooner, partly solved by supply and partly by demand adjusting, whether the Strait opens fully or not. We just need those higher prices first.

Opposite_Day_9771

SPR is going to run out by July. Price sold is under market value. Sooner or later oil will go up. It takes at least four months to remove the sea mines if peace reigns tomorrow. It's already too late. Of course, it could get a lot worse. The fake peace news is timed to manipulate the 10 year bond market and not oil. Anything over 4.5% rate is another peace deal.

phaskellhall

He should look at our SPR graph. We are now at lows not seen since 1984ish. I think we have 400m left

TomatoSpecialist6879

Oil comms trader expect alternative sources and supply chain to be found and established by July, hence the nonchalant reaction to the SPR inventory numbers. That's why if it's not achieved by July, the market is going to go on daily circuit breakers panic until QE gets officially announced to calm the markets(even though it's already on and keeping the bond markets intact). Reality is each bearish bet is against a multitrillion dollar system, they'll soon find a way to do more fuckery than to let reality meet the market. That's until the powers at hand are in short positions and puts to benefit from the short term bear crash like what happened during pandemic, and the 2022 energy crisis.

Ukleafowner

I'm not going to say this won't all end badly but isn't this situation the exact point of having the SPR?

Poptart_Salad

We're also releasing 9-10 million barrels of oil a week from the SPR

ActivatingEMP

Oil shortages will happen even before the SPR is depleted, as commercial inventories are drawing 3-4 million barrels a week even with 9 million barrels draws from the SPR. Current projections have tank bottoms in the US by mid July

PipelineBertaCoin69

That’s actually an unbelievably unnerving thing to say, I’ll keep my eye on the SPR levels to get my answer as to whether or not I should worry

ZYHUA

US bombing Iran yesterday, Isreal bombing Beirut right now, SPR Oil hit new low and will hit tank bottom end of June, of course AI is not gonna stop while we are in a recession

borkdpasito

Japan shorts oil US buys yen US sends SPR draws to Japan \^ this is propping up the economy. When this breaks in 4-6 weeks, it’s so fkin Joever

Academic_Rooster_886

yk whats funny? DJT, even though he probably wont get us a better deal / will only land miniscule improvements, will come out with some crazy announcement and a flashy presentation of it this week, and oil will crash 30% --> SPR fills back up

borkdpasito

Yep. Front month is now August, which is after the SPR buffer is projected to be gone. So basically there is no guarantee the US will be as generous in a scenario where oil is still scarce

Icommandyou

Imo oil will continue to go up I will go in USO at open. We will be out of SPR by end of June anyway

_reverse

Yeah - SPR drawdown aside, it simply doesn’t provide enough output so we are going to run out of gasoline and diesel anyway.