Oil rallied earlier today in part due to a CNN report that the administration plans to seek bids in the autumn to replenish 60 million barrels of oil that it’s selling from the strategic petroleum reserves.Given the tightness in the global market, that’s starting to look like a bad trade.While the bidding will take place in the autumn for the contract, actual purchases and deliveries will take place later. The CNN report said it “will take place in upspecified future years.” Now, a Reuters report said it would likely take place after fiscal year 2023, which ends on Sept 30, 2023. That will threaten to throw a hand grenade to his successor or into his second term. The buying, however, is likely to be much more spread out than the 1mbpd releases we’re seeing now.Looking at pricing further out, we’re through most of the earnings releases and conference calls from major oil companies now. There has been a consistent theme of production discipline. OPEC has achieved the same discipline and continued that today as well.There’s a growing risk of a recession — particularly in Europe — and that could hit demand but I worry that if that’s the case, it will only further depress drilling and lead to a larger spike later.h/t @newsquawk for the meme.
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