Now that OPEC + Cartel has resolved its latest internal dispute, now is a good time to assess the direction of the US oil and gas boom and its future direction. Despite growing concerns about the upcoming COVID Delta variant, there seems to be a consensus that the prosperity will not only last until the end of 2021, but also into the next few years. year.
This will not cheer up the predictors of climate change disasters orpeak oil” demand theory, but the reality on the ground is like this, and no amount of fantasy or false predictions can change these facts. Skeptics will point out that crude oil prices fell on Monday, when Brent crude oil and West Texas Intermediate crude oil prices fell 7%. But in this case, the market usually overreacts to the OPEC+ conflict resolution and the organization’s decision to gradually increase its trading volume in the market next year.
Traders almost always overreact to such major events, but Monday’s reversal has reversed again. Brent crude oil broke $ 71 again in early trading Wednesday, and West Texas Intermediate crude oil is up 3% since Monday. This reversal comes as the global balance of supply and demand continues to put upward pressure on prices.
You don’t have to believe me, just ask Goldman Sachs. Although traders fell sharply in the crude oil market on Monday, Goldman Sachs analysts said they believe OPEC + dispute resolution provides a “modest boost” to its $ 80 summer Brent crude price forecast. per barrel. As reported by Reuters, Goldman Sachs told clients in a report that “the OPEC + deal represents a forecast for the summer price of Brent crude of $ 80 per barrel that” increased “by $ 2, $ 5 more than its forecast. from $ 75 a barrel. next year. US dollar.
analysts from Bank of America’s Global Research Department also believe that OPEC + ‘s resolution is optimistic. They raised their forecast for the average price of Brent crude oil in 2021 from $ 63 to $v 68, and the price forecast for 2022 of $ 60. Increase to US $ 75. Bank of America also expressed its belief that current market trends may temporarily push the price of Brent crude oil above US$100 per barrel next year, and added that the expected supply response of the US shale oil industry will help later this year And easing prices in 2023.
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However, the prospects for this supply response of domestic shale producers are still highly uncertain, because corporate producers use the following methods Achieved better results. Their current focus is to reduce costs, improve cash flow and growth through acquisitions and integration, at the expense of higher drilling budgets. In fact, the upstream oil and gas industry has been one of the best performing investment industries in 2021, and this new reality limits the need to fundamentally increase new drilling activities.
An indicator of continued focus on investor profitability is that as we enter the second half of the year, the number of drilling rigs has increased moderately. In a year of normal recovery in the domestic industry, we expect the number of rigs to increase with the dawn of July, and corporate operators will implement higher revised budgets in the second half of this year. Despite Monday’s drop, crude oil prices have risen 40% since January 1 and people are expected to see dozens of new rigs and fracturing equipment resume operations.
But this is not a normal recovery, as we have seen throughout the year. There is no question that this is the most cautious recovery we have seen for American industry in modern times. So, so far, we’ve seen that since July 1, the response from the rigs has been very calm. Enverus’ daily number of rigs shows that as of July 19, only about 1 rig per day has been added. Only 13 were added in 30 days. OPEC, the US Energy Information Administration and the International Energy Agency predict that global demand will grow rapidly at least by the end of 2023. This rate of increase in drilling activities reflects the cautious attitude of the drilling team. upstream manufacturer management.
This type of precaution is now also seen as a positive factor in the oilfield services industry. In a conference call with analysts and investors on Tuesday, Halliburton executives said they expect their domestic and global business to continue to grow for many years to come. The company’s CEO, Jeff Miller, said in an interview with Bloomberg TV that “the economy feels like it has closed more than 2%, so demand growth is there,” adding that as we meet demand oil world, the company “will need drilling.” lots of services. “And gas.
So what we see here is that Monday’s sharp drop in crude oil prices is far from a sign of the end of the world for oil and gas, but just a short-lived flash in the ongoing process of the gentler and more cautious oil boom in modern America Unless the Delta Variant or some other unforeseen global demand stifles crisis intervention, otherwise, there are many reasons to expect this prosperity to last for months or even years.

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