More 'Short Term' Losses For Oil As Demand Shows No Signs Of Abatement

by Ship & Bunker News Team
Tuesday October 19, 2021

Oil prices on Tuesday experienced another minimal drop due to the same causes for the previous session's decline: a fall in U.S. industrial production last month and weaker GDP numbers from China.

However, analysts believe the profit taking is short-term: "After all, the break above $80 per barrel was triggered by both supply and demand considerations and the underlying picture has not changed," stated PVM Oil Associates.

As of 10:50 a.m. EDT, West Texas Intermediate was trading down 0.04 percent at $82.46 and Brent was down 0.09 percent at $84.34 per barrel.

One thing is certain about the current market circumstances: they represent a continued improvement after the dire conditions experienced in the oil and gas sector last year, as evidenced by a report that banks are now offering more credit to U.S. shale producers as the industry recovers from the 2020 contraction.

According to a survey conducted by law firm Haynes & Boone, borrowing bases will increase as much as 20 percent during impending talks between drillers and lenders; this is a notable improvement over the previous survey published in April that indicated flatness or a rise of only 10 percent.

Unsurprisingly, profits are being reaped in the midst of such high demand: Halliburton Co on Tuesday posted a quarterly profit of $236 million compared with a loss of $17 million last year.

As for the future, oil and gas will continue to contribute to the economic improvement of many countries, including Guyana, whose gross domestic product is expanding by 20 percent this year and which is working with Exxon Mobil Corp to advance a gas-to-energy project via Exxon's offshore oil developments; this will further bolster the Guyana economy and open up opportunities for more manufacturing, agriculture and mining.