OPEC projected cuts cause WTI to fall 10% in just over a week

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ODESSA, Texas (Big 2/Fox 24) – The Organization of the Petroleum Exporting Countries has reduced its demand projections for 2020 and 2021. Much of the concern lies in Asia countries fighting the coronavirus, but we are feeling the effects right here in the Permian.

I think what is happening is the producers are saying hey we don’t want you flooding oil in to the United States like you did in May and June so refiners please keep buying our oil first before you buy any foreign crude.

Kirk Edwards, CEO of Latigo Petroleum

The group revised its outlook for global oil demand to an average of 90.2 million barrels per day in 2020. That’s down 400,000 bpd from the previous month’s estimate and reflects a contraction of 9.5 million bpd year-on-year. Globally, a shift to renewables and natural gas is making people bullish on the industries’ future. Domestically, what is contributing is a lack of jet fuel being burned.

We’re gunna see bad numbers for that industry because people just aren’t getting on airplanes yet.

Kirk Edwards, CEO of Latigo Petroleum

They’re taking the view more people are going to go renewables than every before … people have been going renewable but there is still going to be huge demand for crude for years to come and it will still carry the line and share for all. The renewables will cut into our growth rate some but still forecast growth I believe.

Kyle McGraw, Chariman of the P.B.P.A

OPEC now expects global oil demand to grow by 6.6 million bpd to an average of 96.9 million bpd next year. That’s still not enough to raise the prices back up to exploration level, says Edwards.

What everyone has to realize if 40 is a good number to produce at but we can’t drill at. You won’t see that rig count go up until we see that 55 or 60 dollar oil and have it hedged in fro a couple years.

Kirk Edwards, CEO of Latigo Petroleum

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