Crude oil prices seem to have found a temporary equilibrium in recent weeks, as OPEC + plans to prevent further price hikes, to ensure that US shale gas companies contribute to production and to maintain the global production balance.
Brent’s rapid decline over a six-month period indicates that traders expect the market to remain somewhat tight, with the ongoing downward pressure on global oil stocks in the second half of the year.
According to estimates, OECD commercial oil inventories declined from the pre-epidemic five-year average.
However, the front month Brent prices have generally been stable since mid-February, which means that OPEC + will increase production enough to compensate for increased demand again, ensuring that the market does not shrink further.
Prices appear to have reached a temporary peak after more than three months of strong rally between early November and mid-February.
If prices remain around $ 65 per barrel, the oil supply will last long enough for the remainder of the year, which in real terms will be very close to the long-term average over the past twenty or thirty years.
Prices at this level will be sufficient to stimulate a controlled increase in shale oil production and global production by early 2022.
However, production increases in the US will likely continue to be gradual. Consumption will return as the threat of the epidemic fades and travel restrictions relax. This poses little threat to the market share of OPEC +.
Fiyatlar bu seviyenin oldukça üzerine çıkarsa, kaya gazı endüstrisinin üretim tepkisi doğal olarak hızlanacak ve OPEC + planları için bir tehdit oluşturacaktır. Açıkçası, bu grubun kaçındığı şeydir.
Iran, which is not subject to OPEC + production limits because it is under US sanctions, has been supplying extra products to the market since the beginning of the year through hidden sales to refineries in China.
Perhaps these hidden exports helped the market to stabilize well in the first quarter, offsetting some of the production restrictions.
With restrictions on air travel gradually easing in the second half of the year, there is likely to be sufficient consumption growth to absorb increases from US shale gas, Iran and the rest of OPEC +.
Eventually, this delicate balance depends on substantially easing travel barriers over the next six months and keeping prices close to current levels to avoid triggering a third shale oil boom.
