Crude Price See-Saw
Despite oil rig count levels declining sharply and a number of North American shale producers facing bankruptcy, crude production levels remain surprisingly robust. Moreover, persisting rivalry among the oil producing powerhouses, stubbornly high US crude output and an increasingly gloomy global economic outlook, continues to linger over crude international price benchmarks.
The biggest market shifting force of the month came from Doha, where OPEC failed to negotiate a freeze of production output with non-OPEC producers. As a result, Brent Crude Futures tumbled overnight from US$44 to US41.99, and bears feel the downward price spiral may continue. With many market analysts hopeful of a production freeze, the inability to achieve a cohesive agreement has added pressure on the credibility of OPEC to lead oil producers out of the price rut.
Despite oil rig count levels declining sharply and a number of North American shale producers facing bankruptcy, crude production levels remain surprisingly robust.
"With U.S. crude oil stocks holding at record levels, production declines will need to accelerate to stimulate sustained increases in prompt crude prices..." – Thomas G Ruck, Director, Market/Treasury Risk, KPMG in the US
"A LNG market that is transforming, becoming more varied and increasing globalized presents all participants with challenges..." – Mary Hemmingsen, Partner, Global Head of LNG, KPMG Canada
"Lower fuel price is certainly a good news for Japanese consumers especially when the power retail market has now liberalized..." – Tsuneo “Neo” Miyamoto, Partner, Lead oil and gas in Japan, KPMG Japan
"MiFID II has been absorbing most attention on the regulatory front; it will bring with it some far-reaching changes for oil and gas firms..." – James Maycock, Director, Commodity and Energy Markets Risk and Regulatory
About the authors
Lyuda Sokolova is a director with KPMG in the UK
Thomas G. Ruck is a director with KPMG in the US
Oliver Hsieh is an associate director with KPMG in Singapore