Article Sourced From The June 23rd, Radar Report
If the British bookies are spot on— which they usually are—then oil markets will have dodged the “Brexit” bullet. In expectation that the UK will stay in the European Union, traders scrambled and pushed WTI back above $50/bbl, a 2-week high closing at $50.11/bbl today. Brent approached $51/bbl as well. The notion that the UK might exit the huge European trade bloc would in theory bolster the US dollar, which is typically bad news for oil prices. The latest polls showed a narrow majority opting to stay in the EU, but results won’t be known until early Friday.
Oil markets might get a reality check after breathing a sigh of relief over Brexit, as the supply/demand numbers have not been favorable of late. The EIA estimate of US crude inventories was down by only 900,000 bbl for the week vs. a 5.2 million bbl decline pegged by API. EIA also cited a surprise build in gasoline stocks.
EIA also claims a slowdown in the pace of decline in US crude production, but we usually give that metric a jaundiced eye anyway, just as we must roll our eyes over some market- watchers pointing to the recent gains in rig count as indicative of a supply spurt in the weeks ahead.
That said, 4 consecutive weeks of gains in the US land rig count is a welcome development indeed, even if it’s just the start of a long climb out of the abyss, as we note in the accompanying article on this page.
We’d like to point to an improvement in the unconventional plays that we track, but the modest pickup in the Utica (+4) and Eagle Ford (+2) vs. the last issue of this edition was largely offset by small declines elsewhere. Consequently, we can point to an increase of 11 horizontal rigs and 5 directional rigs scattered among a few plays we don’t track in this report.
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