Commodity Trade Mantra

Posts Tagged ‘Oil Rig Count’

With Several Opposing Factors, can we expect Higher Oil Prices anytime soon?

One factor that could prevent oil prices from falling further is the possibility that prices floundering in the mid-$40s actually puts a lid on shale production. If U.S. shale underperforms over the next year, the OPEC deal could succeed in balancing the market. But if U.S. shale continues to rise & OPEC fails to extend its deal beyond the first quarter of 2018, oil prices could fall to $30 per barrel.

Futures Market Trend Indicates The Return Of Bearishness In Oil Markets

Speculative movements in the futures market don’t dictate everything, but they are good indicators of market sentiment. Net-long positions in crude futures reduced for a third week in a row. Also the fact that the oil glut persists despite what should be bullish trends – high OPEC compliance, growing demand, and the initial signs of falling inventories – suggests that lower oil prices could be forthcoming.

The Oil War Is Only Just Getting Started

OPEC’s decision to deliberately cut oil supply and abandon the strategy of pursuing market share at all costs is currently benefiting the cartel’s competitor, U.S. shale. Five or ten years from now, a possible market share ‘oil war’ would take place on a totally different battleground, and some regiments or battalions may lack essential armory to wage such war.

Oil Prices can Spike on $1 Trillion In Spending Cuts

An oil supply deficit may be hard to fathom given two years of surplus and rock bottom oil prices, but with the financials of so many oil companies badly damaged, upstream investment could come up short in the not-too-distant future, even if oil prices continue to rise this year. The small increase in the US oil rig count over the past few weeks is not nearly enough to reverse the decline.

The Current Rally In Oil Prices Is Reaching Its Limits

Oil prices have climbed by about 50% from their February lows, topping $40 per barrel. But now, with oil traders taking the most bullish positions in months while the fundamentals still have not shifted in a correspondingly significant fashion, traders have set up the conditions where oil prices could snap back to the downside.

This Is Why $20 Oil Price Is A Possibility

I believe that another plunge in the oil price is required to thrust a dagger through the heart of US shale drillers and the banks that have supported them. Low oil price will at some point result in the situation reversing & prices will turn very quickly. But before that can happen, production momentum needs to be switched off & I dare say that requires a sharply lower oil price.

This Month Could Make Or Break The Oil Markets

October could be a crucial month for struggling drillers. With drillers undergoing credit redeterminations, October could see a wave of debt restructuring and cuts to credit lines, potentially forcing deeper cuts in the shale patch. More will be revealed about the trajectory of the U.S. shale industry – and by extension, the trajectory of oil prices – in the next few weeks.

This Is What Will Help Oil Prices To Stabilize

Oil Inventories will remain high in some parts of the world and will be drawn down in others. But overall, rising global oil demand and shrinking U.S. oil production (and other areas as well) will begin to eat away at inventory. It just requires some patience. There will be some foreshadowing in oil prices here.

Despite Oversupply, Oil Rallies on Currency Moves

Domestic oil inventories still stand at near-record levels for this time of year in at least 80 years. Because oil remains in oversupply, the recent rally owes a lot to currency moves. We might be seeing a dollar reset, which should finally give oil, gold, copper & other important commodities – the much-needed breathing room.

What The Rig Plunge Really Means For The Price Of Oil

The market fails to appreciate that the relationship between rig count and oil production can be deceptive. Headline rig count declines may look impressive, but as we look at the data, much of the drop in oil rig count has come in low yielding rigs. The most productive rigs will likely remain as long as possible.

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