Oil Market Awaits North America Rebound

Oil & Gas

(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author.)

The adage “timing is everything” seems to be particularly relevant nowadays among North American oil producers. That is one takeaway from this week’s recap of developments in the oil and gas markets. Read on for one market-watcher’s prediction on when oil producers might provide their insights on good timing, along with additional perspectives on market trends.

Rigzone: What were some market expectations that actually occurred during the past week – and which expectations did not?

Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: The market continues to look for North American production returning to full force, but many producers are being restrained in their timing of bringing back production – particularly in Canada. With quarterly calls the market should get a much clearer view.

Tom McNulty, Houston-based Principal and Energy Practice leader with Valuescope, Inc.: Natural gas has traded down more than one percent this morning, but it’s up more than four percent during the last couple of days because of a storm in the Gulf. Nice to see that some traditions have not changed.

Andrew Goldstein, President, Atlas Commodities LLC: Crude oil inventories built nearly five million barrels, including a 1.35-million build at Cushing. With all of the uncertainty and lack of air travel due to COVID-19, we have seen a $2.50 range in West Texas Intermediate (WTI) spot crude over the past week. Supplies being released to the market have outpaced demand, leading to the build.

Gold continues its rise to new all-time highs and silver at levels we haven’t seen since 2014. With economic uncertainty, investors have been flocking to the safe haven of precious metals.

Rigzone: What were some market surprises?

Goldstein: Barring any surprise moves by OPEC or U.S. policy changes related to COVID-19, I don’t foresee much movement either way in the price of WTI spot crude. Other regions worldwide have seen an increase in demand, therefore an increase in imports/exports as well.

McNulty: The U.S. Energy Information Administration’s crude oil inventory number this week was up 4.9 million barrels, and that was much higher than expected by just about everyone. Crude in storage is nearly 20 percent above average. But it is not just a demand story – there are producers here that will produce at $40 oil to create cash flow.

Le Dain: The Chevron Noble takeover may accelerate sector consolidation given the continued resetting of expectations for low-premium deals and the market receiving it favorably.

To contact the author, email mveazey@rigzone.com.

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