• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes Middle East on brink: Oil tankers attacked off Oman
  • 8 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 4 hours Emissions Need To Be Halved To Avoid 3C Warming
  • 7 mins Iran downs US drone. No military response . . Just Destroy their Economy Completely. Can Senator Kerry be tried for aiding enemy ?
  • 2 hours The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 2 hours Here We Go: New York Lawmakers Pass Aggressive Law To Fight Climate Change
  • 7 hours Coal Boom in Asia is Real and a Long Trend
  • 3 hours Summit in Pyongyang: China's Xi Says World Hopes North Korea-U.S. Talks Can Succeed
  • 4 hours Pioneer CEO Said U.S. Oil Production would be up to 15 mm bbls/day NOW if we had the pipelines. Permian pipelines STARTING Q3
  • 13 hours Solar Panels at 26 cents per watt
  • 6 hours Huge UK Gas Discovery
  • 18 hours The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 18 hours Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 18 hours US to become net oil exporter in November: EIA
  • 17 hours Ireland To Ban New Petrol And Diesel Vehicles From 2030
  • 15 hours US Shale Drilling lacks regulatory body.
Alt Text

Oil Plunges On Fears Of Weak Demand

Oil prices fell another 4%…

Alt Text

U.S. Total Oil Output Poised To Set New 2019 Record

US oil production keeps accelerating…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Trending Discussions

Four Key Catalysts To Watch In The Oil Sector

Just as there is a consequence to every action or two sides to every story, there are contrasting repercussions due to the precipitous oil price drop in the last year. This post takes a look at some such flip sides to see who is benefiting from the recent rout…and who is not.


The below image shows how the US is seeing a varying benefit from low oil prices across the country. Low oil prices are negative for employment in eight states such as Texas, Oklahoma, and North Dakota – where energy-related employment is strong – but positive elsewhere. Low oil prices are also a boost to the broader economy – through the medium of greater consumer disposable income, decreasing energy costs for firms, and higher capital investment and hiring, among other factors.

On the flip side, oil and gas companies unsurprisingly feel the pinch the most as capital expenditures are slashed to limit bloodletting, while material job losses in the oil and gas sector provide a drag on the economy. In summary, lower oil prices are a net-positive – but unevenly distributed – benefit for the US. Related: Audi’s Fuel Breakthrough Could Revolutionize The Automotive Sector

ChangeInEmploymentOilPrices

The flip-flop of fortunes is also illustrated to great effect by the below image, which assesses the global impact of lower oil prices. While the IMF projects that lower oil prices this year could boost the global economy by 0.7%, this benefit is by no means evenly spread.

Net oil-importing regions such as the US, Europe, and Asia are set to be the recipients of a sizeable $900 billion stimulus, while oil-exporting nations are set to fund it. This wealth transfer is most starkly exhibited by the loss of $357 billion by the Middle East this year…and a $393 billion gain by Asia:

OilStimulus

Next up is a trend which highlights the predicament faced by oil producers in the US: whether to weather the storm and keep on producing in a lower price environment, or whether to delay operations and await more favorable market conditions. The result of this conundrum has given birth to the buzzword, ‘fracklog.’ Related: Key Signals That Oil Prices Are On The Up

Rather than fracking wells now, companies are deciding to leave the oil in the ground, awaiting higher prices. The below image from Bloomberg shows 4,731 US wells are drilled but uncompleted (DUCs), which equates to 322,000 barrels a day of oil not coming to market. The usual three suspects of the US fracking boom – the Permian, Eagle Ford and Bakken shale plays – account for more than 3,400 of the fracklog.

UntappedWellInventoryBuild

Finally, we finish with a look at the flip we have seen along the forward curve for crude oil in the last few months. While nearer-term prices have been rising as expectations of slowing US oil production materialize, longer-dated prices have been dropping. Related: We Are Witnessing A Fundamental Change In The Oil Sector

This ‘flattening’ of the forward curve is indicative of increased hedging activity, as US producers are taking advantage of the recent rally in nearer-term prices to lock in prices for next year and beyond. In addition, after the near-term prices had been dragged to six-year lows earlier in the year as US inventories ramped up, the unwinding of the contango in the market is indicative of these oversupply fears abating.

As with everything in life, there are winners and losers, and the recent rout in the oil market is no different. These four aforementioned flip sides should be closely monitored in the coming months, for the oil market will be impacted by these factors – regardless of if they change their tune, or become a broken record. See you on the flip side!

By Matt Smith 

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • Ron Wagner on May 04 2015 said:
    Great article! Looks like a lot of work and expertise went into it.

Leave a comment





Oilprice - The No. 1 Source for Oil & Energy News