Market Insights

December 7, 2016 • Posted in Market Insights

Week of December 5, 2016

  • OPEC members, Russia and others met in Vienna on Wednesday and agreed to cut crude oil production by 1.2 mm. barrels / day (BPD), to 32.5 BPD starting in January 2017
  • Prices moved up to $54 per bbl by Thursday, a level not seen since July of 2015
  • The US EIA reported an 884,000 Bbl draw in U.S. crude inventories
  • Brent was down 1% in Monday morning trading in Asian markets on news of higher U.S. production
  • Goldman Sachs reported an increase of 161 rigs (51%) in the U.S. rig count since the trough in May of 2016
  • Goldman noted that global output may grow before falling as Russia is producing at record levels and Saudi Arabia and Kuwait are restarting fields shut down in 2014 and 2015
  • Natural gas also moved up strongly on higher inventory draws and a colder weather outlook closing at $3.436/ MM BTU on Friday
  • Natural gas is likely to see further increases due to the potential for substitution of oil when oil prices move up

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