Oil prices:
- WTI: up 5.11%; up $3.13; trading at $64.41
- Brent: up 5.10%; up $3.27; trading at $67.34
- OPEC basket: down 3.53; down $2.27; trading at $61.97
Or is it this? ZeroHedge attributes surge in oil prices due to OPEC+ agreement to keep output unchanged. Link here.
See also: SeekingAlpha.
It will be interesting to see if US oil companies stay focused on free cash flow rather than on production.
Damage was minor from the missile attacks. OPEC knows that USA drilling is down and the money is not available from banks to quickly recover from the oil price crash last year. Why flood the markets with oil when they still need a higher price to balance their budgets.
ReplyDelete"Damage was minor from the missile attacks." LOL. That SpaceX landing was successful, too, right up until the moment it exploded. I can't argue with what what you are saying but I have great difficulty attributing a 5% jump in the price of oil when OPEC+ simply agrees to maintain current policy. All things being equal, one could imagine the price of oil dropping simply on that news. The world is awash in oil by some accounts.
DeleteThe US, alone, had a 20+ million bbls build last week which drove US inventories from "zero percent over the five year average" to where we are now: three percent above the already-fat-five-year-average."
Assuming your argument is correct, it will be interesting to see what happens when oil production in the US surges later this year without any significant increase in the number of rigs. Investors are going to do very, very well in this environment where the new meme is "free cash flow instead of growing production."
My thoughts;
Delete-World wide rig counts have declined ~50%, if you stop drilling, it does not stop natural depletion rates of oil wells.
-COVID recovery of economy will increase demand. For example, we are planning on taking the RV out later this month for 10 days. Will use about 3 barrels of diesel fuel and propane.
-There is not much cheap and easy money to fund a lot of drilling. Many banks going green not dealing with fossil fuel companies, but could deal with loan shark companies but pay north of 20% interest.
-The 20mm barrels was offset by drop of refined product withdraws.
Californians should be dreading this September. Gasoline could be very, very expensive.
DeletePrivate companies adding rigs fast. But overall response being held back by Biden drilling permit freeze.
ReplyDeleteThat may be in the Permian, but it's not happening in the Bakken (yet).
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