After a roller coaster, oil-hungry romance over the last 16 months, the melodrama between the U.S. and OPEC may soon be cooling down. Oil continues to fall, and OPEC expects costs to dip lower and lower. Today, oil fell below $70/barrel. On top of that, OPEC is predicting that oil will fall below $50/barrel in 2009. OPEC is undoubtedly caught in the plot of a bad melodrama, and the U.S. is in the middle of it. Prices were flying high in July, only to sink to a 16-month low of $68.57 last week amid fears that a possible U.S. recession will slow demand further. OPEC's fears are so harrowing that they decided to move what they are calling their “extraordinary meeting” up from Nov. 18 to Oct. 24 to come to grips with the rapidly falling price of worldwide oil prices. What's next? Well, just like in any good soap opera, when the girl gets too dependent on the hot, handsome lover, he cuts her off. He stops being interested. He finds another love. So too, OPEC will cut some of its interest in the U.S. The steamy phase of the relationship will cool down, but I doubt the relationship will end. As reported by Algerian news media, Oil Minister Chakib Khelil says the global oil market is oversupplied by about 2 million barrels a day. Many investors are expecting to see OPEC cut production by at least 1 million barrels a day. Whether OPEC will abandon the U.S. completely is somewhat out of the question. This romance is not over yet, but Friday's meeting will be a good DTR (Define The Relationship) between OPEC and the U.S.
Recommended Reading
As Permian Gas Pipelines Quickly Fill, More Buildout Likely—EDA
2024-10-28 - Natural gas volatility remains—typically with prices down, and then down further—but demand is developing rapidly for an expanded energy market, East Daley Analytics says.
Range Confirms: Data Center Talk Underway for Marcellus Gas-fired Power
2024-10-24 - Deals will take a while, however, as these multi-gigawatt agreements are also multi-decade investments, said Range Resources CFO Mark Scucci.
Companies Hop on Digital Twins, AI Trends to Transform Day-to-day Processes
2024-10-23 - A big trend for oil and gas companies is applying AI and digital twin technology into everyday processes, said Kongsberg Digital's Yorinde Lokin-Knegtering at Gastech 2024.
Liberty Capitalizes on Frac Tech Expertise to Navigate Soft Market
2024-10-18 - Liberty Energy capitalized on its “competitive edge” when navigating a challenging demand environment in third-quarter 2024, CEO Chris Wright said in the company’s quarterly earnings call.