The resurgence of COVID-19 has not significantly changed the outlook for oil

Efforts to keep crude prices around $ 65 for Brent, the international standard, have been complicated by the delta variant of the novel coronavirus COVID-19.

“We have relaxed our pricing outlook for the remainder of 2021, thanks to the delta variant,” said Farzin Mou, vice president of intelligence at data analytics firm Enverus and co-author of the company report, “Oil and Gas Markets: Maintaining the Balance? “

Speaking to the Reporter-Telegram by phone, she said researchers expect the drop in U.S. production to narrow, with the drop in production shrinking by 900,000 barrels in 2022.

Another factor is the trend towards high quality stocks. She said the Permian Basin has seen this trend for several years, but it has been exacerbated by the pandemic. In the Rocky Mountains, she said inventory is under stress and producers are expanding their development plans as they reach the end of the drill inventory.

“I also think that the activity of private operators will increase,” she said. “It has already exceeded pre-pandemic levels and more than half of the platforms operated today are by private operators.”

She explained that private operators are increasing production with the aim of attracting potential buyers or, in the case of family businesses, generating cash flow to finance operations.

ESG concerns – Environmental, Social and Governance – continue to play a role, with operators focusing on ESG initiatives and being forced to sell their more carbon-intensive properties, she added. Operators are also partnering with third parties to start offering gas certification.

The improved outlook means the Organization of the Petroleum Exporting Countries and its allies will not have to take 2 million barrels off the market, she said, although she expects some barrels to be. withdrawn as demand slows.

“We expect OPEC to monitor the offer to hit $ 65 Brent. They have worked hard to achieve this price and will do whatever it takes to maintain this price, ”she said.

OPEC’s ability to maintain control of the market is one of the three essential pillars to support prices. The second is the United States’ response to the OPEC price target, and the third is a smooth economic recovery from the pandemic.

Mou said OPEC and the United States will be watching each other to see who ultimately benefits from the improved prices. The US release is the wild card, she said. The report predicts that US producers will add 1.2 million barrels per day in 2022 and 90,000 to 300,000 barrels per day thereafter, mostly from the Permian Basin.

OPEC has worked hard to balance the market and has done a good job. They will do whatever it takes to keep the prices at $ 65, ”she said.

But the least controllable risk is on demand, she added, as rising oil prices dampen demand.

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