Hear Ye, Hear Ye Followers of Thy Market

By: Greg Gill / May 30, 2017

Welcome back to the real world folks, our patriotic holiday may have come to a close, but our markets are still open and on the move.  A few financial giants (Goldman Sachs, Bank of America and JP Morgan) just came out with fresh market forecasts, which could very well be the reason why the price floor is being pushed down this morning.  

Goldman Sachs has now changed its prediction for the average WTI crude price for 2017 from $54.80 per barrel to $52.92 per barrel. Goldman also predicts that WTI will stay right around $50 for the next 2 years, give or take. According to a collection of analysts at Goldman, the market will test lower levels than originally expected.

Why are we still heading lower? Well…. for one thing, the market effect of OPEC’s cuts was unimpressive to say the least. U.S. shale production has showed no sign of stopping and  more and more exploration projects continue to be brought to the table. Companies such as Range Resources, Anadarko and Concho are a few who seem to be leading the pack in regards to exploration and drilling.

Whether it’s in the Permian or Delaware Basin, companies like these will continue to explore and drill as long as the market allows them to be profitable. It’s evident that when crude prices gain strong support, (especially in recent months), that shale production is also likely to follow suit. OPEC even changed its line of thinking towards U.S. shale production. The cartel now expects that an additional 106 million barrels will be added to market this year.  Helping drive U.S. production, is the fact that producers having learned their lesson when prices plummeted, now routinely hedge forward production. This allows them to continue to produce even as prices fall.

How can the market avoid another devastating dip in oil prices when shale production has been so strong lately? Some like to believe that if crude can stay between $45 and $50, U.S. production will settle down a little. The question at hand now is, who has the capabilities to keep crude range-bound between $45 and $50? OPEC put forth some effort with its cuts, but these actions seem to be having less effect on the market that in years past. Will there be a hero that saves the day and keeps production profitable for the world and its producers?

As of 11:00 am, refined products are down approximately 2 cents, while crude sits at $49.43 per barrel.

Categories: Daily Market Update

Greg Gill

Written by

Greg Gill

I’m passionate about fully understanding my customers’ fuel operations and the fuel markets in which they operate. I want them to view me as their fuel expert. To develop strong, trusting partnerships with customers, I have to provide them with meaningful and timely information to ease the challenges of making smart fuel decisions, allowing them to focus on their core business.

Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED "AS IS," WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.


Subscribe to our blog

Price Feed

Stay up-to-date on current fuel prices and market trends with our NYMEX price feed (15 minute delay to the live market).

© 2018 Market data provided and hosted by Barchart Market Data Solutions. Fundamental company data provided by Morningstar and Zacks Investment Research. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer.


Contact Us