• 10 hours Retail On Pace For Most Bankruptcies And Store Closures Ever In One Year: BDO
  • 10 minutes America Could Go Fully Electric Right Now
  • 2 days Majors Oil COs diversify into Renewables ? What synergies forget have with Solar Panels and Wind Tirbines ? None !
  • 36 mins Clean Energy Is Canceling Gas Plants
  • 1 hour GAME CHANGER: MIT Startup Commonwealth Fusion says Commercial Product by early 2030s ! THIS CHANGES EVERYTHING..
  • 2 hours America's Frontline Doctors - Safely Start Living Again!
  • 13 hours Biden denies fracking ban
  • 13 hours "COVID Kills Another Oil Rally" by Tom Kool 10/16/2020
  • 9 mins OP article : "Trump blasts Biden Fracking Plan . . . "
  • 5 hours The Leslie Stahl/60 Minutes Interview with President Trump
  • 7 hours Is the coal industry on the way out?
  • 19 hours Australia’s Commodities Heartland Set for Major Hydrogen Plant
  • 1 day Conoco Pledges ‘Net-Zero’ Emissions in Break With U.S. Rivals
  • 2 days A sneak peak into the US election
The 3 Hottest Renewable Energy IPOs

The 3 Hottest Renewable Energy IPOs

Investors have been betting the…

Halliburton Sees Fracking Activity Picking Up

Halliburton Sees Fracking Activity Picking Up

Halliburton Company (NYSE: HAL), the…

Record High U.S. Crude Inventories Threaten Oil Rally

Anyone connected or exposed to the dynamics of the oil price must be wondering if the recovery in the oil price is sustainable and, indeed, whether it has further to go.

Views are mixed.

Some point to the collapse of industry pioneer Chesapeake Energy into Chapter 11 as a bullish development, arguing the loss of major producers just as demand is recovering in the U.S. can only lift prices as supply becomes less plentiful.

But others point to record high inventories, commercial oil inventories reached an all-time high of 541 million barrels in mid-June, excluding the SPR OilPrice.com reported, as a sign the surplus remains.

Supporting bears’ position, the latest consumption figures – expected to show rapidly recovering consumption as lockdowns all but ended in many states – have taken a sharp reversal. Major consumers, like Texas, released data showing consumption falling again as spiking coronavirus numbers put the break on the recovery. Consumption fell 20% week on week in Texas, the Financial Times reported. Indeed, the initial pace of the price recovery appears to have been its own undoing, as prices climbed to $40/barrel (they have since eased back). Shale oil production actually recovered somewhat, rising by 300,000 b/d from its low point in May. Rising production and falling consumption are surely going to put a cap on the oil price recovery.

Even oil majors appear to be reevaluating the value of their assets long term, with BPShellChevron and others taking impairments on the value of their assets as they look at their assumptions for long-term oil prices. Most had been set around $75-90 per barrel, but clearly if they are willing to take that kind of hit to their numbers then they do not see the price recovering to those levels for years. In a $40 per barrel world, many reserves may never be exploited.

Related: Japanese Firm Develops Battery That’s 90% Cheaper Than Lithium-Ion

For now, though, much will depend on the severity of the recent rise in infection rates and the degree to which these hasten further lockdowns or prolong those already in place.

There remains no shortage of oil in storage across the U.S., and with demand faltering, the prospects for further oil price rises look limited in the short to medium term.

By AG Metalminer.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

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