Crude oil prices are soaring back after getting smashed on last week’s stock market correction. Of course, all the selling in stocks and oil are not about what is happening now but what may or may not happen in the future.
The Energy Information Administration (EIA) released another EIA Drilling Activity report that raised its estimates for shale oil production without considering the realities on the ground. According to the report, the EIA says that U.S. shale oil production will increase by 111,000 barrels a day to 6.55 million barrels a day in February next month, and that production in the Permian Basin will surge by 76,000 barrels a day.
Crude oil prices traded at the highest level since OPEC declared a production war on Shale and laughed off an estimate of record U.S. oil production from the Energy Information Administration. The reason why the oil bears got it wrong was that they underestimated demand and overestimated production.
We now have more evidence that the oil supercycle is underway, crude prices are on the rise as global demand and underinvestment in new oil projects are starting to take their toll on global oil supply.
Welcome to leap year 2018! Ok, I know what you are thinking, you have not heard that it's a leap year. Well, 2018 is not a traditional leap year, but it will be a leap year for crude. Oil struggled this year as the market failed to be convinced that the combination of OPEC and Non-OPEC production cuts and strong global demand could reduce global supply.
What good is it for someone to gain a pipeline, yet lose another? The Forties pipeline is coming back but a loss of a Libyan oil pipeline has the oil bears in a less than festive mood. WTI crude oil hit $60 a barrel yesterday for the first time in 2-and-a-half years and Brent crude hit over $67 a barrel on reports that armed men blew up a pipeline pumping crude oil to Es Sider port on, cutting Libya’s output by up to 100,000 barrels per day.
So much for global warming! Winter is back, and back with a frosty reminder that it can still get cold. Really cold. It's the first real blast of winter in a very long time and the market is trying to get a feel for how that may effect supply.
The forties is down till Christmas, in the old North Sea, it will slow that oil flows into Scotland’s refineries. Christmas will find price hikes, all the way downstream. The forties is down until Christmas and the oil price will scream.