Oil Market Hits and Misses for the Week
At the conclusion of a very challenging week for the global oil industry, a panel of informed market-watchers offered Rigzone their take on recent events. Keep reading for their insights on what they expected and what surprised them during the period.
Rigzone:77彩票注册官网 What were some market expectations that actually occurred during the past week – and which expectations did not?
Tom Seng, Assistant Professor of Energy Business at the University of Tulsa’s Collins College of Business: Unfortunately this week, the expectation that the market would crater on the Saudi/Russia price war came to fruition as we hit four-year lows.
Tom McNulty, Houston-based managing director with B. Riley Financial’s Great American Group: The market expectation that the energy complex would be disproportionately hit very hard actually panned out.
Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: One thing that was expected, and occurred, was the beginning of the global stimulus response to the virus. So far these have been monetary responses though, which are the quickest to implement and why they were chosen, but may not be effective based on the economic impacts. If I run a restaurant and no one shows up for a month because of the virus, the European Central Bank buying bonds doesn’t help me and it’s difficult for me to access or receive any benefits related to that program. This is a different type of economic stress which already has governments discussing universal incomes for the areas impacted. A program like this makes more sense given the situation and would be better to achieve a in demand for all products.
Barani Krishnan, Senior Commodities Analyst at : The market tanked as almost everyone expected, but the gravity of the drop – 25 percent on Monday itself, or the worst in almost three decades – was still stunning.
Rigzone: What were some market surprises?
McNulty: 77彩票注册官网The price and production battle between the Saudis and the Russians came as a surprise to oil markets last weekend.
Le Dain: A major surprise has been that Russia and OPEC have maintained their commitment to a price war despite recent developments. Obviously the price drop has been extreme, but a key recent development is that the U.S. administration (and even Canadian provincial governments) may consider aid to energy companies in the form of cheap loans.
Krishnan: The Saudis are so determined to raise production – after being so determined to cut just weeks ago! It’s surreal, like watching an Arab horror movie – if there is one.
Seng: The level of drop in the U.S. stock markets was definitely not foreseen this week. What had been a coronavirus-led decline was exacerbated by falling oil stocks hit hard by the lower prices. Some major E&P companies saw stock prices fall by as much as 50 percent this week. Crude inventory increased more than expected, adding to the already “bearish” sentiment for oil while refined product inventories helped lend some support. Meanwhile, natural gas storage withdrawals were less than expected, indicating less demand last week for natural gas as we move away from winter – its highest demand period.
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