Dollar Rallies As Rate Cuts Appear Less Likely
April 22, 2024
Baker Hughes reported that oil rigs were up 5 to a total of 511 and last year there were 591 oil rigs. US oil producers have decreased rigs but continue to find and pump out more oil with near record production for many months now. But despite their discipline and good growth as reported by Bloomberg, SLB Chief Executive Officer Olivier Le Peuch said, Persistently low natural-gas prices, corporate consolidation and conservative spending plans are conspiring to shrink the once-booming market for drilling and fracking in the US shale patch. Demand for oilfield services is growing elsewhere, particularly offshore and in the Middle East.
Israel and Iran have both exchanged retaliatory attacks on one another and no major damage has been done in either country. The energy markets are now easing some of the risk premium out of prices as it appears the tensions are easing. Energy markets are now likely to settle into a trading range here in the medium term.
The recent talks of potentially no rates cuts in 2024 has rallied the US dollar and that has put downside pressure on commodity prices in general, but especially WTI crude oil which is priced in dollars around the world.
The US Environmental Protection n Agency will temporarily expand sales of higher-ethanol blends of gasoline this summer in an effort to reduce potential supply disruptions amid ongoing conflicts in Ukraine and the Middle East.