What to Watch in the Oil Market This Week

What to Watch in the Oil Market This Week
Here's what a Rigzone panel of market-watchers will be on the lookout for this week.

Last week was exceptionally challenging for the global oil market. Below are some expectations about what to expect this week from a panel of market-watchers familiar to regular Rigzone readers.

Tom Seng, Assistant Professor of Energy Business at the University of Tulsa’s Collins College of Business: With the closure of every major sporting event in the U.S. for the next several weeks, we will see a big decline in energy consumption that would normally surround these venues and cities. But, with more and more people moving to working at home – or “self-quarantining” – residential energy consumption should increase.

Tom McNulty, Houston-based managing director with B. Riley Financial’s Great American Group: There will be substantial damage and some destruction to energy companies in North America because of the demand shock we are seeing right now. However, the industry here will emerge even stronger with better balance sheets and the Darwinian elimination of weak companies. If you assume that the long-term mean reversion price for oil lies in a $34 to $37 range, and borrow accordingly, you will be fine.

Barani Krishnan, Senior Commodities Analyst at Investing.com: Frankly, at this point, anything goes. Trump seems to be firing blanks at the markets while world central banks are barely able to do enough to restore sentiment despite promises of trillions of dollars combined

Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: OPEC+ likely wants to avoid a situation where they force the U.S. to subsidize the production of their number-one export to the point that it structurally reduces prices going forward. Given this, OPEC+ would be best served by cutting supply to a level that didn’t invite government intervention in North America, but rather just restricted supply growth. This is what we will be watching for in the coming weeks.

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


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