Quarterly Oil Market Update: (Volatility Returns to Oil Markets)
Oil Market ReportOil prices rose 10 percent quarter-on-quarter in Q1 2017, but volatility levels were up too, especially towards the end of the quarter. Although both OPEC and non-OPEC cuts are contributing to a reduction in global oil balances, global commercial oil inventories nevertheless remain high. Demand is expected to pick up in H2 2017.
Recovery in Oil Prices: Rebound in US Shale Oil?
Oil Market ReportDuring Q1 2016, US oil production saw its first year-on-year decline in eight years and this decline is expected to continue throughout the remainder of 2016. Despite this, the recently observed uptick in oil prices presents shale oil companies with a potential life-line. Not only does it raise the possibility of hedges being taken out again, an increasing number of shale oil companies are restructuring under chapter 11 bankruptcies, thereby prolonging oil production. Concurrently, the number of drilled uncompleted wells (DUCs), all of which can be brought on-line relatively quickly, have risen in recent months. All of these developments mean that even as current oil and financial indicators point to declining production in the next two years, production could turn out to be better than expected.
