Commodities

Shale firms discount the ‘U.S. Stocksak: “U.S.” is not sufficient to raise oil output


© Stocksak. FILEPHOTO: A tour of the Department of Energy at Strategic Petroleum Reserve in Freeport Texas, U.S.A. June 9, 2016, shows an oil storage tank and crude oil pipe equipment. REUTERS/Richard Carson

(This Oct. 21 article has been rewritten to correct the spelling error in CEO’s first name to Trisha instead of Tricia in paragraph 3)

By Stephanie Kelly and Arathy Smasekhar

(Stocksak). – U.S. shale Oil Executive Matt Gallagher conducted a Twitter poll to gauge public opinion about President Joe Biden’s offer of stocking the U.S. oil emergency reserve at prices around $72 per barrel to encourage producers to drill more.

The results: Nearly 80% of respondents stated that they don’t think oil futures will fall to a point that would trigger any U.S. buys next year. This negates any boost provided by what analysts called the “U.S. puts” or using proposed Strategic Petroleum Reserve purchase to set a minimum price to produce new oil.

Trisha Curtis (CEO of consultancy PetroNerds), said that the announcement made it seem like he was throwing a stone to the oil industry. She dismissed the offer.

“What if oil doesn’t fall to that price? Do we keep our reserves low?” She was curious.

Biden “tried to walk a fine balance between supporting his green base while trying to lower fuel prices by releasing the last of 180 million barrels.” Curtis stated that Biden did neither.

A spokesperson for the U.S. Department of Energy was not immediately available for comment.

Oil is currently selling for $85 a barrel, and the $70 offer is “a price where there’s no supply growth,” said Abhiramrajendran, a director of consultancy Energy Intelligence.

According to Hunter Kornfeind of Rapidan Energy Group, an oil market analyst, the U.S. oil price reached $120 per barrel in this year’s U.S. and did not trigger a production boom due to shortages and high labor costs.

Rebecca Babin is a senior energy trader at CIBC Private Wealth. She said that tight oil supplies have pushed prices up into 2024. She added that the SPR offer was not the only reason.

Oil-futures from mid-to late-2024 trade at $72 a barrel. This means oil producers can lock-in the sales price for future production at the level set for SPR purchase, according to Kornfeind.

Frank Macchiarola, senior vice president at the trade group American Petroleum Institute, stated that if the Biden administration wants oil supplies to increase, it should “change its policies around producing oil and gas in the United States.”

(By Arathy Smasekhar, Bangalore, Stephanie Kelly, New York; writing by Gary McWilliams; editing by Robert Birsel

News Source and Credit

Stocksak Editorial

We are a financial blog that covers topics such as investing, saving, spending, and earning more money. Please feel free to peruse our site and read any of the articles that catch your interest.

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button