Upcoming Data Should Clarify Oil Market Recovery

Upcoming Data Should Clarify Oil Market Recovery
Here is a preview of what to watch in the oil market this week.

In Rigzone’s most recent review of weekly oil market “hits and misses” one market-watcher pointed out that demand is recovering, albeit slowly. In their preview of what to watch this week in the oil market, panelists anticipate limited price growth, more production shut-ins and perhaps even a break in the tight oil storage situation. Moreover, upcoming market indicators this week should provide a clearer view of the U.S. economy’s re-opening as COVID-19 lockdowns expire. Keep reading for details on these potential trends and more.

Barani Krishnan, Senior Commodities Analyst at Investing.com: The glut is far from over despite the nascent price recovery we are seeing. It’s obvious that the market is front-running the impact expected from “Reopen America!,” but I think U.S. crude will still spend considerable time under $30 a barrel before there’s significant demand to take it to the next level.

Tom Seng, Assistant Professor of Energy Business at University of Tulsa’s Collins College of Business: U.S. oil producers will have to continue to shut-in production in order for prices to rise to sustainable levels. And, to the extent possible, U.S. buyers should curtail the amount of imported crude to reduce the current supply/demand surplus. Additionally, we will be watching for an increase in gasoline consumption as states work to re-open.

Jamie Webster, Senior Director, Boston Consulting Group Center for Energy Impact: The International Energy Agency’s monthly report is out Thursday and will be keenly watched to give an overall sense of the global oil market position. The weekly storage report will also be critical – particularly the stock changes at Cushing. The level of fill has slowed, and with the bottom likely in on refinery run cuts, we may actually eke through this with a bit of spare storage. Finally, Friday’s U.S. industrial production index will be released, providing the market with more information of the depth of the impact on the broader economy.

Tom Curran, Senior Energy Services and Equipment Analyst in Equity Research, B. Riley FBR, Inc.: Given a U.S. onshore downcycle start that has made the history books for both swiftness and severity – with astonishing 83-percent and 49-percent plunges-to-date, respectively, in the weekly active frac spread and working land drilling rig counts from their First Quarter 2020 peaks – we’ll be listening on calls and scouring data flow for any signs of an approaching bottom.

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


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