Gary Ross, the founder, executive chairman and chief oil soothsayer at New York-based consultancy PIRA, told clients 2½ weeks ago that he reckoned the “lows are in” for crude, which was then about $30 a barrel.
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Brent oil prices shot above $40 a barrel on Monday to their highest level this year after data showed a smaller-than-expected USA build in crude stockpiles, while US equity indexes were little changed.
“The macro picture takes all corners of the globe into account, and those corners seem to be improving…and that’s where I’m seeing the oil price tick higher”, added Mr. Le Brun.
But energy companies and the suppliers and contractors they work with have been badly affected with thousands of jobs axed globally, including many in the North Sea. Gold and iron ore prices hit multi-month highs on Monday while Asian equities rose to two-month highs.
After reaching a peak of 1,609 in 2014, there are now 69% fewer oil rigs in the U.S. A lower rig count is bullish for oil as it points to lower production in the future.
Brent Crude is up 1.01% to $39.11 during today’s trade.
CMC Markets analyst Rick Spooner said: “We’re starting to see U.S. production levels decline and if that happens it could easily drive momentum in oil a bit further”.
Capital Economics analysts said Thursday: “Exceptionally high stocks and the potential for a rebound in USA production means that we think that the oil market is likely to remain well supplied out to 2020, especially if there is a partial recovery in prices over the next two years”.
On Friday, “we re riding on the back of the (US) unemployment numbers”, he said, referring to the Labor Department s closely watched monthly jobs report.
Baker Hughes, oilfield services provider, announced on Friday that the number of drilling rigs in the USA fell to 392, down by 8, last week.
Over the weekend, Premier Li Keqiang laid out China’s target economic growth should average at least 6.5% over the next five years.
“More important for short-term price action has been improved sentiment on the macro front and across risky assets globally”.
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Officials from less influential members such as Venezuela or Angola have occasionally referenced specific prices, generally in the vicinity of $70 to $80, but the bigger Gulf producers have largely avoided any public mention of a new reference point, leaving the market adrift. Thus, prices can continue to rally on headlines and a USA dollar pullback, but the upside should be limited by bloated global inventories and producer hedging.
