1. Futures depict emerging oil supply glut
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- Oil futures slipped into contango in the fourth quarter, a sign of an emerging glut of supply. Contango – when futures trade at a discount relative to longer-dated contracts – often accompanies a short-term supply surplus.
- But the OPEC+ cuts helped boost near-term pricing, and Brent has been in a state of backwardation since February.
- Front-month contracts recently traded at a higher than $5-per-barrel premium to contracts 13 months out, the highest premium in six months.
- The U.S. announcement not to renew Iran sanctions waivers resulted in a brief spike in near-term pricing. But after last years’ experience, OPEC+ will likely be cautious before making any rash decisions.
- “Instead, we expect OPEC to keep the market tight and allow prices to drift higher, regardless of the short-term volatility caused by Trump’s oil supply comments,” Standard Chartered wrote in a note this week.
2. More than 1 million kilometers of wells to be drilled
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- The global oil industry is expected to drill more than 1 million kilometers of new oil and gas wells over the next five years, according to Rystad Energy. To access this exclusive content... Select your membership level below COMMUNITY MEMBERSHIP (FREE) GLOBAL ENERGY ALERT ($418 $79 PER YEAR)
- The depth of those wells is equivalent to 2.5 times the distance to the moon, or 25 times around the equator.
- In 2019 alone, around 65,000 new oil and gas wells will be drilled. 
