Oil has closed the opening gap for the week and is now up $2.01 to $59.13. It’s an unlikely rebound after OPEC+ added barrels once again on the weekend and a leak said they will continue to do so until Kazakhstan and Iraq meet their pledges to pay back overproduction.
I think there is an element of short-covering at the moment but yesterday’s report from shale driller Diamondback Energy highlights the likelihood of US output falling this year (and continuing to fall sub-$60).
The company cut its capex budget for the year by 10% and CEO Travis Stice penned a letter:
“We are taking our foot off the accelerator as we approach a red light.
If the light turns green before we get to the stoplight, we will hit the
gas again, but we are also prepared to brake if needed,” Stice wrote, highlighting that it needs to see $65 oil, particularly with steel tariffs spiking the price of casing.
He estimates the US frac crew count is down 15% this year and expected to decline further
