Latest Market Commentary
November 27, 2017
The Baker Hughes Rig Count Report from last week showed the US added 9 rigs drilling for oil. In Canada the oil rigs were down 2. High crude prices seem to have brought a renewed interest in drilling. The addition of rigs tends to lag the rise in oil prices and many had thought the rig increases had leveled off but last week’s jump seems to have renewed the positive outlook for increased drilling.
The OPEC meeting is this Thursday November 30 in Vienna. Expect some market volatility as a result of this and the headlines and speculation that will surround it. Barclays said in a report, “This week, we expect volatile prices as market participants shed length. Prices might fall in the immediate aftermath of the deal as speculative length “sells the new.” Still, the fundamentals should keep Brent at an average of $60 a barrel this quarter.”
OPEC is trying to recruit an additional 20 non-members to the meeting on Thursday. Doing all they can to garner support to rebalance world oil markets. The additional non-members invited include, Argentina, Benin, Bolivia, Brazil, Cameroon, Chad, Colombia, Democratic Republic of Congo, Congo, Egypt, Ghana, Indonesia, Ivory Coast, Mauritania, Niger, Norway, South Africa, Tajikistan, Turkmenistan, and Uzbekistan.
The market currently seem to be of the outlook that OPEC will extend cuts until the end of 2018. Anything less will be a disappointment. There are those that ultimately see the decision resting with Russia. They have been on all side of this deal with Putin saying one thing and Novak another but most see them on board to extend cuts. Of course OPEC has the issue with extending the cut potentially encouraging increased production, mostly from US shale and the possibility of decreased demand with higher prices.