Output Cuts and Storage Scarcity Could Drive Oil Market This Week | Rigzone
In their review of last week’s oil market hits and misses, Rigzone’s panel of market-watchers directed much of their attention on reports of phone calls between President Trump and leaders of Russia and Saudi Arabia. Rigzone’s panelists expect that topic to remain a focus of what to watch in the oil market this week. Read on for their perspectives.
Tom Seng, Assistant Professor of Energy Business at University of Tulsa’s Collins College of Business: OPEC and the Russia+ group are expected to hold a conference call on Monday to discuss the possibility of output cuts. Speculation is that the Saudis would cut 3 million barrels per day (bpd) while the Russia+ group would cut an additional 3 million bpd. But, both groups are waiting to see what comes out of today’s (Friday’s) meeting of President Trump and several U.S. exploration and production CEOs. At this point OPEC and Russia say they won’t cut if the U.S. doesn’t. Even if a total of 10 million bpd does happen, global demand has already fallen by an estimated 25 to 30 million bpd so the cuts would barely make a difference at this point. And, even with the rise in WTI to $27 per barrel (at midday Friday), it’s still not profitable for most U.S. producers to continue to lift oil.
Andrew Goldstein, President, Atlas Commodities LLC: As continued volatility prevails in most financial markets worldwide, I look for investors to move to precious metals. Although we have not seen the price of gold increase to the levels most expected, we have seen a move off the monthly low of $1,477.30 (per ounce) up to $1,613, where we are currently (midday Friday) trading.
Steve Blair, Senior Account Executive, RCG Division of Marex Spectron: If nothing is accomplished in reducing production, then more talk should come into play as the producers will eventually become more desperate as buyers wither away and storage becomes not only more scarce but extremely high-priced – which it already is, particularly for on-water tanker storage.
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