March Madness 2021 Boom or Bust for Crude

Crude has been the underdog since Covid-19 broke onto the scene in early March of 2020. We have seen historic contango, negative trading, inventories at the verge of 100% capacity. However, we have also seen refineries curtailing production and shutting down, crude breaking technical level after level, OPEC + committing to decreased outputs, a Texas winter weather creating supply concerns, and a slow steady recovery of crude as inventories are drawn down and production resumes. Crude has built a full head of steam and looks to be an unstoppable force and a surefire pick to rise to glory yet again for 2021. March Madness is known for its volatile emotional up and downs and surprise sleeper teams with unimaginable upsets. Will 2021 and a third European lockdown amid vaccine safety concerns be the sleeper to upset the rise of Crude?!

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Saudi’s Want to Increase Oil Production?

After 2020’s unpredicted decline in oil prices and subsequent response by OPEC+ to cut oil production as means to buoy oil prices, the world’s largest exporter Saudi Arabia, plans to reverse its position and increase its production in the coming months. This comes as WTI oil prices have traded to as low as negative $40/barrel back in April 2020, to currently trading at $60.42/barrel. Earlier this month OPEC+ leaders said they would cut production by one million barrels per day, with efforts to raise prices during the months of February and March.

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Slim in…for good?

Oil and gas explorations remain sluggish and failing to rebound as expected. At $40+ a barrel and positive market indicator would historically promote conditions for the industry to recover, however there has been no indication of a recovery to speak of. The new normal seems to be a slim, budget conscious, and efficient industry soup to nuts.

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The Latest From Libya

The National Oil Corporation in Libya (NOC) is eager to reopen one of their main export hubs this week, marking the first movement from the OPEC member since oil terminals were placed under force majeure at the beginning of this year after the occupation of the Libyan National Army (LNA). As the blockade reaches into its seventh month and Libyan oil production plummeting from 1.2 million bpd to 100,000 bpd during this period, the LNA and NOC are currently negotiating the restart of oil production.

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Will the Oil Rally Lose its Luster?

As we near the end of May, we will put behind us one of the most bullish rallies for the WTI crude oil contract in history with crude jumping almost 75% this month alone. Of course, with WTI prices currently trading at $33.33/barrel, that’s not saying much, as it is widely perceived the breakeven price for domestic crude producers is $32/barrel. The question is: will this rally persist? Let’s review some components to watch out for this summer.

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