Bullish Signals for Crude Oil Prices
October 11, 2021
The energy markets rallied and closed higher on Friday driven mainly by the news that a deal was reached in Congress to raise the debt ceiling through early December. Also, supporting prices on Friday was the Department of Energy saying they had no plans to release barrels from the SPR to lower prices.
Baker Hughes reported on Friday that the number of oil rigs went up 5 to a total of 433 rigs. This is much higher than the 193 crude oil rigs that were in operation last year at this time. There are more rigs than last year, but the number is still well below the number in the boom of the shale area. US crude oil production has hovered around 11.3 million BPD for many months now, which is well below the nearly 13 million BPD back in the heights of the shale area. This lower production has shown up in a lot of areas and the current global energy crunch is driving prices higher.
ANZ Research said increasing tightness in markets is likely to put further demand pressure on crude oil prices in the fourth quarter and raised its short-term target to $90 per barrel. ANZ Research also stated that rising natural gas and thermal coal prices will cause an increase in gas-to-oil switching and sees a continued recovery in demand for transportation fuels as global mobility restrictions ease.
Bank of America Global Research see a continuing deficit in the oil market after the OPEC+ decision not to increase its output in October beyond the previously planned increase of 400,000 BPD.