With oil markets closed Jan. 1 for the New Year’s Day holiday, the next driver is likely to be the OPEC+ group meeting Jan. 4, when ministers will decide on production quotas for February.
Russian Deputy Prime Minister Alexander Novak floated the possibility Dec. 25 of another 500,000 b/d increase for February, the maximum monthly amount allowed under the rules set by the alliance for the first half of 2021.
Algerian energy minister Abdelmadjid Attar, however, said days later that members should remain cautious, with the emerging new virus strains likely to weigh on global oil demand.
“Is the oil demand forecast for [the first-quarter] better than that forecasted in early December? I don’t believe so, with the lockdown in many countries in Europe until the end of January,” one delegate told S&P Global Platts, asking not to be named. “It would be more reasonable not to increase production in February.”
Front-month Brent and WTI settled at the highest level since Dec. 18.
The crude forward structure turned more bullish amid improved fundamental outlooks. The front-month and sixth-month NYMEX WTI contracts settled at parity Dec. 31, eliminating a contango that had persisted since Feb. 21. Meanwhile, the roll of the front-month ICE Brent contract to March pushed the entire Brent curve into backwardation save for the second-month contract, which settled at a 2 cent/b contango compared with the front month.
NYMEX January RBOB settled 36 points lower at $1.4084/gal and January ULSD settled down 1.35 cents at $1.4763/gal.
The US oil and gas rig count fell by six to 407 in the week ended Dec. 30 as 2020 ended with activity down slightly more than 50% from the prior-year point, rig data provider Enverus said.
Total oil rigs dropped by seven to 293 on the week, while total gas rigs rose by one to 114. The number of horizontal rigs, which generally indicate high-producing shale/unconventional formations, was up five to 335.
But even as rig activity ended 2020 at a much lower level than where it began, total oil and gas rigs were up 30% in Q4 from Q3. The industry’s confidence has been buoyed with new vaccines against the coronavirus pandemic beginning to be distributed.
by S&G Global
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience in implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor in this space. Stuart has led the “Total Corporate Digital Integration” platform at Sandstone and works with Sandstone clients to help integrate all aspects of modern digital business. He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage and is the Co-Host of the energy news video and Podcast Energy News Beat.
Stuart is on Board Member of ASN Productions, DI Communities
Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.