It’s a short month but as always there are many topics circulating the Oil & Gas (O&G) industry. First, U.S. oil inventory has quickly increased and Wall Street is ramping up investment in O&G. U.S. shale oil output is predicted to increase 41,000 barrels a day this month to over 4.7 million barrels a day. Total crude oil and petroleum products stocks are up to 2.055 billion barrels, increasing inventory by over 25 million barrels produced since January. As upstream businesses are ramping up production, Wall Street is looking to invest more in O&G, but only if crude prices climb higher and higher. WTI Crude Oil index is hovering at $54/bbl, but has been there for the last month without much growth.
Outside of North America, the Organization of the Petroleum Exporting Countries (OPEC) have agreed to curb output, but the total market is not showing signs of decreased inventory and crude prices have not increased as OPEC once thought it would. This can signal the beginning of the destabilization of OPEC if they cannot prove to be successful in controlling the market. Venezuela, an original OPEC member, is in serious trouble and as the country can’t afford to export its own oil.
Today we see a total of 1,082 oil rigs for U.S. and Canada, up 362 rigs since last year to date. It is clear that in order for crude oil prices to increase, there must be a shift between supply and demand. Currently, the market is still saturated and it looks like we’ll be holding this trend for through the first quarter of 2017.