Last fall, as oil prices crashed, Ali al-Naimi, Saudi Arabia’s petroleum minister and the world’s de facto energy czar, went mum. He still popped up, as is his habit, at industry conferences on three continents. Yet from mid-September to the middle of November, while benchmark crude prices plunged 21 percent to a four-year low, Naimi didn’t utter a word in public.
For months, the world’s most respected commodity price forecasters have repeatedly embarrassed themselves by attempting to call a low point for a barrel of West Texas Intermediate (WTI) crude in the mid-70s, then the mid-60s and finally the low 50s. Those outlooks all proved too optimistic, of course, with WTI prices sinking below $45 last month.
More than seven months after experts first predicted the crash in crude oil prices would be little more than a “temporary blip”, there is reason to believe the worst is over. According to a new report from Canaccord Genuity, Royal Dutch Shell might have just “fired the starting gun for the next up cycle” by making a $70-billion bid to buy BG Group, and not only because of the hefty 52% premium the offer price implies.
The U.S. shale production boom could end next month
For the first time since it began issuing its Drilling Productivity Report in 2013, the EIA is forecasting a drop in US oil production from five of the seven key US Lower 48 basins- by a total of 57,000 bpd in May. Thus, the US shale oil production boom that began around 2006 could come to an end next month. Before we go any further, it is essential to emphasize that we are not saying that US shale oil activity will soon end. We are saying that the massive growth in production might be at an inflection point lower following several boom years.
Saudi Arabia was worried about a danger much bigger than shale when it blindsided the markets
Last fall, as oil prices crashed, Ali al-Naimi, Saudi Arabia’s petroleum minister and the world’s de facto energy czar, went mum. He still popped up, as is his habit, at industry conferences on three continents. Yet from mid-September to the middle of November, while benchmark crude prices plunged 21 per cent to a four-year low, Naimi didn’t utter a word in public.
Saudi Arabia said it will keep pumping oil to meet demand as the world’s biggest crude exporter seeks to defend its share of the market.
The oil market is in “excellent” condition, Prince Abdulaziz bin Salman, Saudi Arabia’s deputy oil minister, told reporters on Monday in the eastern city of Khobar, without elaborating. The kingdom seeks to keep customers happy and maintain stability of prices, demand and supply, he said.
Traders, producers at odds over how and when oil prices will bounce back
Oil traders are mispricing crude futures for later this decade because they’re underestimating how a collapse in spending will affect supplies, according to consultants who advise energy producers and analysts.
Prices could rise to about $100 a barrel by 2019, about 34 per cent above where Brent crude oil futures for that year are trading, says JBC Energy GmbH, a Vienna-based company that’s followed oil markets for more than two decades. Energy suppliers cut about $126 billion of expenditure following last year’s price drop of almost 50 per cent, estimates Wood Mackenzie Ltd., an Edinburgh-based consultant