Drilling Rates Stall in Response to Slumping Oil Prices
February 20, 2023
Energy Markets are closed today so there are no forward contracts available today and there will be no estimated prices sent out until tomorrow.
The Baker Hughes Rig Count called oil rigs down 2 to a total of 607 and last year at this time there were 520 oil rigs in operations. Total oil rigs of all types are at 760, and John Kemp of Reuters says that drilling rates have stalled in response to the slump in prices since the third quarter of 2022. There has been no net increase in the number of active rigs (760) for the last 31 weeks.
JPMorgan analyst said Brent oil prices are unlikely to breach the $100 dollars per barrel this year barring any significant geopolitical drivers, with OPEC+ potentially adding supply and Russian flows recovering by mid-2023. The analysts’ said OPEC is unlike to defend the $80 dollars per barrel price floor and hence would need to cut production quotas this year. They added that the group could instead add 400,000 bpd to supply. JPMorgan analyst stated that with Russian output expected to see a full recovery by June and higher price levels preventing the US from purchasing to add to is strategic reserves, the supply-demand balance will likely tighten further. JPMorgan also maintained its estimates for top importer China’s oil demand growth of 770,00 bpd.
Analysts said China is expected to import a record amount of crude oil in 2023 due to increased demand for fuel as people travel more after China lifted its COVID-19 controls and as a result of new refineries coming on stream. According to four industry consultancies, Wood Mackenzie, FGE, Energy Aspects and S&P Global Commodity Insight, China’s crude imports may increase between 500,000 bpd and 1 million bpd this year to as high as 11.8 million bpd, reversing the previous two years’ decline and exceeding 2020’s record 10.8 million bpd.
Bloomberg reports that new cars have increasingly gotten out of reach for the middle class. The average monthly payment has soared to $777, almost double that of late 2019.