The oil price took a bit of a tumble last month. Naturally, this occurred just after I’d finished writing my comment for our March issue wherein I stated that things were “still looking relatively positive for the global upstream industry.” I am writing this comment with my fingers firmly crossed…
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The sudden drop (which has seen WTI only just scrape back above US$50), was caused by an unexpected surge in US inventories – analysts had been expecting a rise of 2 million bbls; what they got was a rise of 8.2 million bbls, marking the ninth consecutive week of rising US crude inventories. According to the U.S. Energy Information Administration, the unexpectedly large rise was caused by a combination of reduced refinery output and increased imports.1
Since then, things have recovered somewhat. Indeed, whilst US inventories might be rising, there are signs that this is not the case elsewhere and that OPEC’s cuts might be bearing fruit. According to information given to the Financial Times, crude oil being stored offshore or transported by supertankers has dropped by up to 16% since 1 January.2 Fabio Kun, CEO of
Whilst seaborne transit and storage volumes can only ever provide a partial image of the industry,
As before, it looks like there is cause for cautious optimism; the industry faces enormous challenges, but there are still opportunities out there. The Oilfield Technology team will be attending OTC on 1 - 4 May (Stand 2776); we’d love to hear your thoughts on the technologies and innovations that will keep the industry going!
- ‘Oil settles at $50.28, plunging to nearly 3-month low after US crude inventories rise for 9th straight week’ - http://www.cnbc.com/2017/03/08/crude-prices-fall-on-likely-us-stocks-build.html
- ‘Oil’s seaborne picture suggests Opec cuts taking effect’ - https://www.ft.com/content/26ae1866-1888-11e7-a53d-df09f373be87
- ‘Where next for deepwater projects?’ - https://www.woodmac.com/reports/upstream-oil-and-gas-where-next-for-deepwater-projects-46072690?contentId=46072690&source=30&isVideo=0&isPresentation=0&track=22