Market Update

7/11/2017

Today’s Market News
 Oversupply has banks cutting 2017 and 2018 price forecasts for crude: For Brent crude oil, BNP Paribas has reduced its 2017 average full year price forecast for 2017 from $60/bbl to $51/bbl while 2018 has been slashed by $15/bbl (to $48/bbl). Barclays also made cuts with estimates of $52/bbl for both years (down from $57 in 2017 and $55 in 2018). Crude prices are currently about 18% below the levels seen at the beginning of 2017.

 Current U.S. shale drilling boom likely to ease: Halliburton suggests that the current count (of 763 rigs) in the U.S. is likely to grow some (possibly even to 1,000 or higher by year’s end) but will then level off. This is primarily due to this amount of activity putting too much of demands on service companies and likely driving costs too high.

 Bank suggests WTI could fall to below $40: Even though U.S. oil stocks showed a large decline last week, Goldman Sachs is suggesting that these types of inventory draws need to be sustained (along with a fall in U.S. rig counts) or WTI prices could push below $40/bbl. It’s three-month WTI forecast average price is $47.50/bbl.

 Market Opinion: Even though the complex was able to eke out gains across the board yesterday, this morning is again starting weaker for both crude and products. Today’s API estimates are again calling for crude draws (of 3.2 million bbls) but crude is trending lower and look for WTI to target current $43.50 support levels.

 

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