US wants lower Oil prices and the administration is open to allowing Russian Oil back in the market. Already OPEC is talking about increasing production in April. Remember the last time during Shale war, Saudi’s essentially bankrupted US shale oil producers. The administration is going to open more federal lands, and remove all regulatory hurdle to drilling. Oil companies will be forced to abandon their discipline and increase production, that’s the only way they can survive, compete and generate cashflow.
While in the short-term you get cheap oil, there are long-term costs. That’s for someone else to clean up that mess. But essentially Oil companies will suffer.
I will be closing my Chevron, XOM, BP positions or at least will go short XLE to hedge them.
I have closed BP, still holding $XOM $CVX. I will continue to hold $XOM, CVX. The covered calls I have sold have all declined 80%, 90%, so I will close them by buying back. I have closed $XLE hedge sometime back. Today I have started by selling $XLE naked calls. Oil prices has to raise by 20% for my $XLE naked calls to be in trouble.
$CVX is going to scale back their buybacks because of declining Oil price. Ironically, as the oil price declines, share price declines and share buyback amount declines.
Separately, $CVX is somewhat driving lower Oil, Their TCO oil field in Kazakhstan started production, and quickly hit 100% production in 30 days vs initial guidance of 90 days. Thus this resulted in Kazakhstan producing more Oil than their OPEC quota, and Saudi’s frustrated by various OPEC members going over quota decided to increase their own production…
There is drill baby drill going on worldwide. Countries are trying to increase their production as Oil price decline and the more they increase the production, further Oil prices fall.. Of course POTUS will rightfully claim due to his energy policy Oil prices are falling.
The big producers in the mid-east are tired of the little guys violating their production quotas, so they’re going to open the spigots (some.) Russian oil may indeed find its way onto the market, further depressing prices. You know what else takes the prices down? Recession, and factories cutting back and air travel being reduced because people travel less, not to mention wholesale boycotts by foreign travelers thanks to, uh, errant and idiotic policies emanating from the White House.
Also, more EVs and hybrids using less gas, and people doing a stay-cation instead of traveling far.
I’m also reducing exposure; I got rid of BP a while ago, but still have CHV and XOM. To paraphrase Archie Bell and the Drells, “Do the Lighten Up”.
