Mid-Week Review

Summary by Wayne Lee

Goldman Sachs believes oil prices are about to go on a wild ride in 2019

Brent crude oil could easily rise into the $70-$75 per barrel trading range in the coming months, Goldman Sachs says.  The fundamental supply-and-demand outlook is being bolstered by technical support after oil prices hit three-month highs.  However, a surge in U.S. shale oil output and rising low-cost production from OPEC and its allies will pull prices back down in the second half of 2019.  Click here to read more from CNBC.

Why Oil Tanker Rates Just Doubled

Tanker demand and freight rates are usually a reliable metric of oil demand patterns and trends.  Recently, tanker demand and rates have highlighted shifting supply patterns and have sparked a bit of a worry about OPEC’s compliance rates.  What sparked the worry was a rebound in tanker rates from a low of US$15,000 per day earlier in February to double that last week. Market Watch’s William Watts reports that this rebound caused a “knee-jerk” reaction in traders, immediately concluding that OPEC producers were failing in their production cut agreement: higher rates mean more demand for tankers and this means more crude coming into the market, normally.  Indeed, this is the case now as well, only it’s not Middle Eastern oil that’s coming in greater amounts into the market. It’s U.S. light crude, which is being pumped at ever-increasing rates.  Click here to read more from OilPrice.com.

Aramco CEO says oil industry facing ‘a crisis of perception’

Saudi Aramco’s chief executive said on Tuesday the oil industry is facing “a crisis of perception” and the views of some observers that the end of oil is near with the rise of electric vehicles are illogical and not based on fact.  Amin Nasser, CEO of the national oil company of the world’s top crude-exporting country, told an industry event in London that demand for oil is expected to increase substantially, driven mainly by the transportation sector.  Click here to read more from Reuters.

Will Current Oil Exploration Support Future Demand Growth?

One of the big concerns during the depths of the oil price bust of 2014-2016 was the fact that so many big, integrated and state-run oil companies were delaying or taking a full pass on investing in major and highly-costly international projects. During the financial retrenchment of this dark period, exploration for major new resources consistently took a back seat to finding ways to pay the bills and service the company’s debt.  This lack of investment in new exploration and infrastructure projects led to concerns among many energy analysts that we could be facing a shortage of global supply early in the next decade as decline rates caused existing reserves to play out without the needed new production coming on line to replace them.  Click here to read more from Forbes.