What You Need To Know About Oil And Gas Today
The State of Play
I suppose we can call this a “Big Story.” West Texas Intermediate crested the $40/barrel mark again this morning in early trading. Of course, the last time that happened a couple of weeks ago, the price quickly began a decline back into the $36 range.
The motivating factor behind this upwards move appears to be promises by some OPEC+ participating countries made yesterday to focus on better compliance with their production quotas under the group’s most recent agreement. Those promises plus $2.50 will buy you a cup of coffee at Starbucks. But hey, hope springs eternal in the oil patch.
In another bit of positive news, the Primary Vision frac spread count inched up to 69 this week, up from an all-time low of 45 just a few weeks ago. Of course, that compares to a four-week rolling average of 419 active spreads during 2019, so we’re not exactly booming again, but every little bit helps.
Meanwhile, after hitting an all-time low of 294 on Monday, the Enverus Daily Rig Count clawed its way back to 302 yesterday before dropping back to 298 this morning. Thus, again this week, we see frac spreads being reactivated mainly so that companies can try to cut down their inventory of “Drilled but not Completed” – DUC – wells in this low price environment.
Sergio Chapa has a very good story at the Houston Chronicle today covering the damage these boom and bust cycles cause to the industry, its employees, and its ability to attract new talent among young people. The tens of thousands of layoffs we see happening today will negatively impact the industry’s workforce for a decade or more. If you read just one story about the industry on this lovely Friday, read this one.
As a sister article to that piece, the very busy Mr. Chapa has another one today discussing the fact that employment levels in the oilfield service sector are now approaching the lows seen during the last big bust, which ran from 2014 through 2016. Ugh.
Yeah, that’s not going to happen. Reliable fear-mongering CNN has a click-bait piece today trying to frighten everyone about the prospect of $190 oil prices in 2025. It’s based on a tiny sliver of a larger report issued back in early March by J.P. Morgan. Don’t lose any sleep over this one, folks.
That’s all for today.