On Monday, WTI crude oil closed for the day up 8.6% at $49.20. The short rally helped it to a monthly gain of 8.7% for August. While crude oil prices opened lower in trading on Tuesday, two reports released on Monday could give the industry the incremental help it needs to begin to edge higher.
On Monday, the Energy Information Administration released its Petroleum Supply Monthly report. The report stated a daily barrel oil production rate of 9.3 million for June. The report showed a decrease in the daily production rate of 100,000 barrels per day from May. Additionally, in an effort to more accurately report on oil production levels the EIA instituted a new survey system which more directly incorporates data by individual states. The new system overall led to favorable gains for the industry with per day barrel production levels reduced by 40,000 to 130,000 barrels per day for the months of January through May. While the lower production numbers are a result of abandoned or delayed projects, the lower inventory level leads to decreased market supply and helps add incrementally to the price of oil.
Additionally, in a report also released on Monday, the Organization of Petroleum Exporting Countries gave its observations on the energy industry and the current effects from oil’s low price levels. It stated its concern for the socioeconomic effects from lower revenue and the lack of near-term investment in exploratory projects. The sentiment from OPEC was more cooperative than in previous reports, and the organization also noted its willingness to discuss solutions with stakeholders for achieving price equilibrium in the industry overall. Negotiation on production levels specifically within OPEC countries would help the industry considerably.
In an interview Monday with CNBC, energy expert Roger Read of Wells Fargo gave his insight following the day’s positive reports noting some of his top picks in the industry.
