WTI tops $ 60 on closures in the Gulf of Mexico

Oil prices rose this week, driven by geopolitical tension and the tropical storm on the Gulf Coast.

Friday, July 12, 2019

About 30% of production in the Gulf of Mexico has been closed. Tropical storm Barry, which could still turn into a hurricane, has forced about 30% of oil production in the Gulf of Mexico closed. About 44% of natural gas production was also closed.

The IEA and OPEC will see a surplus next year. The IEA and OPEC have published this week contradictory reports on the oil market, both of which provide for a new supply surplus in 2020. Although the figures vary a bit, the l & # 39; offer shows that non-OPEC supply (mainly American shale) continues to grow at a torrid pace, exceeding demand. growth. As a result, the call for OPEC falls next year, raising the question of whether OPEC + will have to reduce production even more than it currently does.

The shale industry is slowing down. The main shale drillers reject their growth plans in the face of production problems, financial stress and the vigilance of investors. Bloomberg details some of the production downgrades. For example, EOG Resources (NYSE: EOG) has reduced its growth plans for 2019 by 3%. "You have to spend more and more every year to grow faster," Noah Barrett, an energy analyst with Janus Henderson, told Bloomberg. "Companies have systematically spent 120 to 130% of their cash flow without generating cash flow or positive profits." …