US Consumer Sentiment Falls
May 13, 2024
The Baker Hughes rig count was down 3 to a total of 496 oil rigs. Last year at this time there were 586 oil rigs in operation. Despite the decline in rigs, US oil production has been near record highs for months.
Comments from Federal Reserve officials suggesting that interest rates may need to stay higher for longer have put pressure on energy prices. Market observers say a 25 point basis cut near the end of 2024 is still possible.
US consumer sentiment came in much lower than expected for May 2024. The University of Michigan’s US consumer sentiment report for May 2024 fell to a reading of 67.4 which was well below the 77 reading expected and below the range (74 to 79.5) expected.
Citi Research last week put out some bearish forecasts for crude pricing through the end of the year. In their latest price estimates they forecast Brent crude to trade $86 per barrel in Q2 before sliding to $74 in Q3.
Goldman Sachs also put out a price forecast last week. They forecast Brent crude oil between $75 to $90 per barrel and averaging $82 per barrel in 2025.
OPEC+ meeting in early June with the expectation they will extend their production cuts offers support to prices. The $78 dollar level is still seen as a key support level for WTI crude oil.