Jump in Demand Could Be Coming
As global lockdowns ease, oil demand is expected to exceed supply sometime in July but OPEC has yet to clear 1 billion barrels of excess oil inventories accumulated since March, Reuters reported.
Rystad’s Bjornar Tonhaugen said Saturday’s decision would help OPEC reduce inventories at a rate of 3 million to 4 million bpd in July-August. “The quicker stocks fall, the higher prices will get,” he said.
US Oil & Gas Rig Count Falls to Record Low for 5th Week – Baker Hughes
U.S. energy firms cut the number of oil and natural gas rigs operating to a record low for a fifth week in a row even as some producers begin to reverse cuts as prices recover from historic lows caused by a slump in fuel demand amid coronavirus lockdowns, Reuters reported.
That was 691 rigs, or 71%, below this time last year and was the fifth week in a row the U.S. count fell to a fresh record low.
U.S. oil rigs fell 16 to 206 this week, their lowest since June 2009, while gas rigs dropped by one to 76, their lowest on record according to data going to 1987.
Will US Producers Begin to Peel Back Production Cuts?
Shales producers Parsley Energy, Inc. and EOG Resources, Inc. on Tuesday disclosed plans to restore some or all of their output cuts. In North Dakota, state energy officials this week reduced by 7% an estimate of production shut-ins in the second-largest oil producing state.
However, production coming back online is a fraction of what has been cut, and analysts said they expect U.S. energy firms to continue chopping rigs for the rest of the year and keep the count low in 2021 and 2022.
Short-Term Outlook
It’s my job to point out the possible headwinds facing crude oil as well as reporting on the bullish stuff. At this time, the demand is so weak in the United States that distillate fuel inventory is sitting on a record high. Gasoline inventories, according to the U.S. Energy Information Administration (EIA) is also extremely high.
There is also growing fear that a second-wave of coronavirus outbreaks is coming. At this time, I haven’t seen any indications that the U.S. will shut down its economy for a second time as this would be an economic disaster. However, a second wave could still keep people from going about their normal activities which would keep the pressure on demand.
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June 07, 2020 at 10:47AM
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Oil Price Fundamental Daily Forecast – Is Too Much Emphasis Being Placed on Supply Cuts? Where's the Demand? - FX Empire
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