Non-OPEC oil supply unlikely to bounce back to pre-pandemic levels in short term, predict analysts
Analysts have warned that non-OPEC oil and gas supply is unlikely to renege on its 2020 losses in the short-term.
A file photo of a drilling rig.
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Analysts have warned that non-OPEC oil and gas supply is unlikely to renege on its 2020 losses in the short-term.
A reduction in capex and a “very thin” upstream project pipeline is going to limit the ability of operators to bounce back to pre-Covid-19 production levels, said Joel Hancock, oil specialist at French investment bank Natixis.
Oil Slips With Global Virus Risks Clouding a Demand Rebound
Bloomberg 1/28/2021 Andres Guerra Luz
(Bloomberg) -- Oil declined the most in nearly a week with the spread of new Covid-19 variants and tighter lockdown measures weighing on nascent hopes of a demand recovery.
Futures in New York fell nearly 1% after choppy trading earlier on Thursday. The coronavirus variant identified in South Africa is reported to have reached the U.S. At the same time, worries over vaccine shortages in Europe continued to emerge, with Germany casting doubt on the effectiveness of AstraZeneca Plc’s shot for the elderly.
“Concerns about the new Covid variants causing shutdowns in Europe and Asia, China especially,” are stoking worries over consumption, said Michael Lynch, president of Strategic Energy & Economic Research. “The market was balanced and inventories were coming down,” but now “people are worried demand may weaken even further.”
Oil Falls With Rising U.S. Supplies an Obstacle to Recovery
Bloomberg 1/22/2021 Andres Guerra Luz
(Bloomberg) -- Oil declined the most in a week with rising U.S. crude stockpiles seen as an obstacle facing a market that is still recovering from a pandemic-induced demand slump.
Futures fell 1.6% to the lowest level in nearly two weeks in New York on Friday. A U.S. government report showed domestic crude inventories increased for the first time since December, rising more than 4 million barrels last week. However, the data also showed refiners processed the most crude since March, an encouraging sign.
“This is clearly a bearish number short-term,” said Quinn Kiley, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets. But the data “suggest demand has recovered a lot more than maybe people would have noticed.”