Brent gained significantly more than WTI last week, rising $1.03/bbl to average $63.66/bbl. WTI rose $0.28/bbl to average $57.43/bbl. For the week ahead, Stratas Advisors expect volatile prices in light of the OPEC+ meeting. Prices are likely to average lower than last week at $62.50/bbl unless OPEC surprises with a larger than expected production cut.
Rumors are swirling that Saudi Arabia is pushing to add up to another 500 mb/d to current production cuts, in part to support the upcoming Saudi Aramco IPO. Reports from unnamed sources that Saudi Arabia is working to build consensus on the cuts pushed prices up on Monday, and will lead to additional volatility this week. Unless Saudi Arabia is willing to take on the majority of the burden of additional cuts, we think it unlikely that the group agrees to an adjustment. Several countries continue to sell above their quotas and compliance will certainly come up in advance of deeper cuts. The most likely outcome continues to be an extension until June 2020 with the possibility of further adjustment.
Also Monday morning, President Trump announced that he was reimposing tariffs on all steel and aluminum imports from Brazil and Argentina. This adds more complexity to the United States’ myriad trade disputes. Congress has still not ratified the USMCA, and seems unlikely to before the New Year. December 15 additional tariffs are scheduled to go into effect against China. Beijing is already insisting that current tariffs be rolled back in order to sign a Phase One trade deal, and if new tariffs go into effect talks could be quickly derailed.
Geopolitical Unrest – Neutral
Global Economy – Neutral
Oil Supply – Negative
Oil Demand – Neutral
How We Did
Recommended Reading
Sinopec Brings West Sichuan Gas Field Onstream
2024-03-14 - The 100 Bcm sour gas onshore field, West Sichuan Gas Field, is expected to produce 2 Bcm per year.
Tech Trends: Halliburton’s Carbon Capturing Cement Solution
2024-02-20 - Halliburton’s new CorrosaLock cement solution provides chemical resistance to CO2 and minimizes the impact of cyclic loading on the cement barrier.
E&P Highlights: Feb. 16, 2024
2024-02-19 - From the mobile offshore production unit arriving at the Nong Yao Field offshore Thailand to approval for the Castorone vessel to resume operations, below is a compilation of the latest headlines in the E&P space.
E&P Highlights: April 29, 2024
2024-04-29 - Here’s a roundup of the latest E&P headlines, including a new contract award and drilling technology.
Orange Basin Serves Up More Light Oil
2024-03-15 - Galp’s Mopane-2X exploration well offshore Namibia found a significant column of hydrocarbons, and the operator is assessing commerciality of the discovery.