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Fundamentals Point To Higher Oil Prices…But is that Enough?

Oil rig

Friday, June 17, 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. A repeat of 2015 oil price rally?

(Click to enlarge)

- In 2015 oil prices rallied in the first half of the year only to fall back again. There are concerns that this year’s rally could run out of steam too.
- The 2016 oil price rally has lasted longer than the 2015 rally, 140 days in counting vs. the 2015 total of 112 days.
- Oil prices gained 19 cents per day on average during the 2015 rally, similar to the 18 cents/day rally on average this year.
- The fear is that speculators, once again, have bid up prices higher than is justified. The supply outage in Canada is temporary, so more production will start coming back online. Plus the rig count in the U.S. has ticked up and companies will start working through the backlog of drilled but uncompleted wells.
- Prices are on much sounder footing in 2016 compared to last year as the fundamentals look much stronger. But there is no guarantee the rally will persist.

2. Oil speculators pause as rig count rises

- Speculators backed off their bullish positions for the week ending on June 7. Two consecutive weeks of rig count increases raised the prospect…

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