Does a correction tissue for the oil market?

(The views and opinions expressed in this article are those of the sources and do not necessarily reflect the position of Rigzone or the author.)

Does crude oil fall due for a correction, or do the basic needs of demand continue to support upward momentum in prices? This question has recently been asked by various oil observers. In this week’s rate of what to look for in the oil and gas markets, two of Rigzone’s regular market commentators offer rationales behind both price scenarios. Meanwhile, a third prognosticator points out that the demand for a natural gas liquid has been quite healthy and could remain so for longer than expected. Continue reading for details.

Phil Kangas, Responsible Partner in the United States, Energy Advisor, Natural Resources and Mining, Grant Thornton LLP: As oil prices have risen in recent weeks, the number of active rigs has also been made. Baker Hughes (NYSE: BKR) reported that both the total number and number of oil rigs are now at the highest numbers since last spring, achieving 11 consecutive weeks of growth. OPEC restrictions are in place and should continue to limit supply. As production becomes more profitable with rising raw prices, we will continue to see how upstream suppliers further increase activity.

Independent oil traders such as Vitol SA and Gunvor Group Ltd. has recently advised caution regarding the recent rise in crude prices. While the upward trajectory is a welcome development for many, premature prices may reflect optimism from vaccine rollout and confidence that production restrictions will hold. Advisors at both trading companies have noted key technical indicators that crude oil is in overbought territory and predict that a correction may be pending. Will be something to see in the coming days and weeks.

Tom McNulty, Houston-based manager and energy practice manager with Valuescope, Inc.: Demand will continue to rise. Let’s look at China for a moment. China’s imports of crude oil rose in January by almost 20 percent more than they imported in December. Global demand will not be stopped; it will increase and this will result in more energy being produced in all forms across the complex.

Mark Le Dain, Vice President of Strategy for Oil and Gas Data Validate: Propane demand reaches several years’ heights and supports the total demand for products. With heating for outdoor dining, this level of demand may last a little longer than historic seasons.

To contact the author, email [email protected].

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