Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Energy Report: Stalemate

By Phil FlynnCommoditiesOct 19, 2020 09:20AM ET
www.investing.com/analysis/energy-report-stalemate-200541560
Energy Report: Stalemate
By Phil Flynn   |  Oct 19, 2020 09:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Oil prices have been in a stalemate between the bulls and bears, with fleeting victories on either side of the equation.

Global oil supplies have been tightening but fears of a worldwide second wave of Covid 19 is raising demand fears.

The stakes are high that OPEC Plus, as the Joint Ministerial Monitoring Committee, meets online today. There is a push by Saudi Arabia and Russia to extend cuts through 2021 and push members who have cheated on reductions to continue to make up the difference. They also have to talk about an adjustment to make up for the return of Libyan oil supply. No decision is expected today, but a surprise announcement of a cut extension could break us out of this trading range. A deal may be critical to continue to drain global oil supply, mainly because we see signs that U.S. producers will try to raise output again.

MarketWatch reported that Baker Hughes (NYSE:BKR), -2.30% on Friday said that the number of active U.S. rigs drilling for oil rose by 12 to 205 this week. The increase followed increases in each of the last three weeks. The total active U.S. rig count, meanwhile, was up 13 to 282, according to Baker Hughes.

U.S. output was down significantly because of Hurricane Delta and should rebound this week. Yet will it recover to pre hurricane levels of over 11 million barrel of oil a day? HFI Research says that it will not. They say that the real-time U.S. oil production reading indicates a level of 10.783 million barrels a day into October. With September U.S. oil production now set at ~11 mb/d average, the implied decline rate between August and September excluding shut-ins is around ~500k b/d. Consensus has U.S. oil production flat around ~11 mb/d for the next year, this will prove to be too optimistic. HFI has a U.S. oil production declining to ~10.4 mb/d by year-end and depending on where WTI is, and it could be even lower by mid-2021. The consensus production forecast will only come true if WTI is closer to $60/bbl WTI.

We should see draws across the board on crude oil, gasoline, distillates. Demand improvements have been a factor. China and India say great demand, and in the U.S., an uptick in distillate demand was supportive.

We still believe that oil is bottoming. We look for a global supply deficit to lift prices.

Natural Gas is setting up for an up week as winter comes in and LNG exports resume. Look to put on bullish strategies.

Energy Report: Stalemate
 

Related Articles

Craig Erlam
Oil Rises, Gold Faces Key Resistance By Craig Erlam - Jan 17, 2022 4

Oil prices are edging higher again at the start of the week as it continues its remarkable run since bottoming in early December. It’s up more than 30% over that time and there...

Andrew Lane
3 Scenarios For Gold And Silver In 2022 By Andrew Lane - Jan 17, 2022 3

With the markets already starting to react to the Fed’s tapering and interest rake hike policies for 2022, we believe the markets are setting up for three possible scenarios, which...

Energy Report: Stalemate

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email