Oil Market Hits and Misses for the Week

As far as the oil and gas markets are concerned, one might safely assume that misses outnumbered hits over the past week. Keep reading for the perspectives on recent events from Rigzone’s panel of market-watchers.

Rigzone: What were some market expectations that actually occurred during the past week – and which expectations did not?

Tom Seng, Assistant Professor of Energy Business at the University of Tulsa’s Collins College of Business: Oil held the $45 level on some “bargain” buying and technical. Winter’s over for natural gas. Only a “biblically hot” summer can save it now as it hit a four-year low this week.

Steve Blair, Senior Account Executive, RCG Division of Marex Spectron: I think that everything going on in the petroleum markets has been dependent upon the effects of the coronavirus on demand for oil and refined products. That is the obvious thing. The market expectations were that OPEC+ would come to some kind of agreement on cutting some production in efforts to stem the tide of the sharp downward spike in prices even though the Russians were opposed to making cuts until assessment could be made on the actual economic effects.

Rigzone: What were some market surprises?

Blair: There are really two surprises that have come out of the OPEC and OPEC+ meetings yesterday and today. First, that the Russians continue to oppose any further production cuts at all without compromise and, two, that OPEC has previously stated that they would not cut production unless the non-OPEC producers also cut production. Of course, things could change quickly as the OPEC+ meeting has not concluded and things could change before the end of the day today. (EDITOR’S NOTE: News reports subsequently noted that OPEC+ failed to make a deal Friday.)

Seng: Coronavirus overrode the OPEC decision to cut output by 1 million barrels while seeking another 500,000-barrel cut from the OPEC+ group. Analysts called for a U.S. crude inventory draw of 3.1 million barrels while the government report showed 784,000 barrels. Meanwhile, natural gas storage declined right in line with expectations at 109 billion cubic feet last week.

To contact the author, email mveazey@rigzone.com.