Oil prices are beginning to find a floor, with WTI closing just above US$46/barrel on Friday for a return of 3.5% on the week. Black gold has been moving within a range of $43 and $51 per barrel for exactly two months.
- As reported weekly by Baker Hughes (N:BHI), the number of active drilling rigs in the U.S. fell again. With 16 fewer rigs in operation, the new figure last week was 578, well below the peak of 1,600 reached in 2014.
- Last week the U.S. giant Chevron (N:CVX) announced that it was going to cut 10% of its workforce. This represents close to 7,000 jobs, or four times the number of jobs it cut just three months ago. Furthermore, the multinational announced that it has scaled back its long-term production target.
- The U.S. Energy Information Agency (EIA) announced that oil output in the U.S. declined by 45,000 barrels per day in August, to 9.32 million bpd. Even though this is close to twice the level recorded in 2011, output has nevertheless been trending downward for the last few months. Knowing that global output currently exceeds demand by 1 million bpd and that output from OPEC members can be expected to remain relatively unchanged, any major rise in oil prices will depend on deeper cuts in the U.S. This is why it is important to keep a close eye on this figure, which is published on a weekly basis.
- With two months remaining in 2015, many of our clients are beginning to prepare their budgets for 2016. Note that we are looking at prices below $0.60/liter for next year, a situation that has not been seen for a complete calendar year since 2009.
Have a good week!
Philippe Shebib