By Timothy S. Snyder, Matador Economics
This morning’s stories driving activity across our markets are: “OPEC+ production reduction program continuation” and “Russian/Ukrainian ceasefire talks and the leaks that are hurting negotiations”.
These will push and pull at prices, guaranteeing a continuation of the sideways trade for crude oil and their products. Remember, we are ticking closer every day to the change for the “Summer Blends of gasoline” which always increases the price for retail gasoline from 20 to 25 cents per gallon.
It would be nice to see some progress on the ceasefire between Russia and Ukraine, and it needs to happen to cut a couple of layers of risk off current prices. There are forces souring the progress, however, including leakage of confidential details of U.S. plans to assist.
Additionally, OPEC+ is losing ground from a market share standpoint. Production from non OPEC+ countries is growing as the cartel continues to try to manipulate the price of crude oil by restricting production. This tactic works for the short term, but for an organization whose primary focus is to control market share, it loses ground when demand expands; a slippery slope for OPEC+.
Friday’s Baker Hughes Rig Count showed U.S. E&P companies only added one crude oil rig and one natural rig the previous week, as miscellaneous rigs and offshore remained unchanged on the week. Current totals are: Total Rigs 588, crude oil rigs 481, natural gas rigs 101, miscellaneous rigs 6 and Offshore rigs are at 14.
Other top energy news
U.S. Winter Weather: Here comes bitter cold and a wintery mess across the central half of the country. I’m sure you have seen the map, but it is one for the ages as yet another polar vortex plunges into the southern U.S. pushing temps into the cellar for more than half of the country.
This week’s temps are reminiscent of the “Grid-Freeze” of Valentines day in 2021 and will push prices to dangerously low levels for the next 48+ hours. Remember this, things tend to not work at optimum levels when you have 11 degree temps across the Permian Basin.
Remember the “Three P’s” to check on: People. Pets. Pipes. This polar vortex is already a deadly storm!
More energy commentary is available at www.matadoreconomics.com
