I guessed at the possibility of oil dipping again in a previous post. If you subscribe to the economic war theory it makes sense in the lead up to the Aramco launch, especially following a period of hedging opportunity. The next IEA report is out next week but the current report says:
"The oil market is clearly tightening; in the three consecutive quarters 2Q17-4Q17 OECD crude stocks fell by an average of 630 kb/d; such a threesome has happened rarely in modern history: examples include 1999 (prices doubled), 2009 (prices increased by nearly $20/bbl), and 2013 (prices increased by $6/bbl). Since the nadir for Brent crude in June when the price was $45/bbl, the 2017 OECD crude draws have coincided with a price increase for Brent of nearly $25/bbl."
The latest drop is due to a claimed increase in the US rig count but the conundrum of US oil continues. All other things being equal, as US production increases then so its profitability decreases in that boom an bust cycle. The hope for US crude must be that both Saudi and Venezuelan oil output will collapse and that looks increasingly likely with a low oil price.
Meanwhile TLW is in an excellent position to ride out further storms,
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