Oil prices continue to stall. Rig counts continue to climb.
The increase in U.S. oil rigs continues to put pressure on oil prices. As of Friday afternoon, Baker Hughes published data showing active U.S. drilling rigs rose by five to 688 for week ending 4/21. That continues the rally, making it 14 weeks in a row the U.S. rig count has increased. Meanwhile, Price per barrel dropped below $50 or 7% week over week. Additionally, with the French presidential elections, instability on the Korean peninsula and the continued Syrian conflict, investor confidence is highly volatile at the moment, which also contributes to the unpredictability of oil prices.
Some OPEC members reach a tentative agreement to extend supply cuts.
Prior to the next OPEC member meeting, Saudi Arabia Energy Minister Kalid al-Falih hinted that a few OPEC members have reached a preliminary agreement to extend cuts to supply. “Consensus is building, but it is not done yet,” Falih stated, “We are talking to all countries. We haven’t reached an agreement for sure, but the consensus is building.”
The decision and full member consensus (Including Russia) is anticipated to come from the May 25th member meeting in Vienna; however, unless the trend of rising U.S. production slows, the decision to extend cuts seems inevitable.
Sri Lanka oil workers go on strike.
As a protest against the government’s action to lease oil tanks to neighboring India, employees from the state-run petroleum corporation have gone on strike. Union workers have cut off fuel supplies from 12 of the country’s major storage facilities since Sunday, and the disruption to the supply chain is causing long lines to form at gasoline stations across Sri Lanka.
Trade union leaders have stated their displeasure with the government agreement stating it only benefits Indian companies. Rajakaruna, the union head and representative, feels the lease of 14 tanks (out of 99) would severely affect Sri Lanka's economy and sovereignty. Minister of Sri Lanka's Petroleum Resources Development, Chandima Weerakkody, and Rajakaruna are set to meet today in hopes of resolving the issue.