Energy Prices Move Higher on Bullish Support
October 4, 2021
Energy prices were overall higher on Friday as they continued to add more upside from Thursday as traders and investors speculated on the results of the OPEC+ meeting today. Also adding support were good economic reports on Friday for US manufacturing and US consumer sentiment. China news about them wanting to ensure power with oil also added support.
Baker Hughes reported that oil rigs were up 6 to a total of 428 oil rigs. Last year at this time, there were 189 US oil rigs.
Let the bullish outlooks continue as Bank of America Global Research said the global energy crunch could help increase oil prices by over $100 per barrel for the first time since 2014 and cause a global economic crisis.
JP Morgan increased its Brent crude oil price target to $84 per barrel from a previous forecast of $78 per barrel as rising natural gas prices prompt fuel switching. Worldwide, gas-to-oil switching may add as much as 9525,000 BPD to demand, potentially adding another $3 to the bank’s forecast.
The following quote is from Bloomberg. Global natural gas shortages, record gas and coal prices, a power crunch in China, and a three-year high on oil prices tell one story – energy demand has roared back, and the world still needs fossil fuels to meet most of those energy needs.
Energy market prices are just a little this morning as it waits on the OPEC+ decision about production. Even if OPEC+ does decide to increase output, the bearish impact on prices is likely to be very near term as the current energy supply issues will keep many onboard the bullish uptrend.
The FT reported Scott Sheffield, chief executive of Texas-based Pioneer Natural Resources, said America’s once-prolific shale producers would keep using their burgeoning cash piles to pay shareholders, not fund new drilling. Sheffield expects everyone to show discipline, regardless of whether it’s $75 Brent, $80 Brent, or $100 Brent. All the shareholders I’ve talked to said that if anybody goes back to growth, they will punish those companies. I don’t think the world can rely very much on US shale, he said. It is really under OPEC’s control.