Shale oil output in the US may grow significantly over the next five years due to increased activity in oil rigs and fast productivity gains, Bank of America predicts. The key reason: breakeven costs for key major US plays now stand around the $55/bbl mark. Assuming a gradual recovery in oil prices, annual US shale oil growth is expected to rise by 700 thousand b/d annually by 2022: a total increase of 3.5mmbpd.
Despite record gluts in crude and gasoline amid resurgent US crude production, hedge funds boosted their net long position in WTI last week to a new record high. For the first time ever, hedge funds hold more than a billion barrels of bets that crude oil prices will rally.
Despite US markets being closed in observance of Washington's birthday, S&P futures spiked during overnight trading, reaching new all time highs before fading some of the gains. Both Asian and European markets traded modestly higher after paring early gains.
With gasoline demand at "recessionary levels", and as gasoline inventories hit all time highs, traders are lining up to export gasoline and diesel from New York Harbor, an area that normally relies on fuel imports from Europe and eastern Canada.
"With a high level of oil revenue spending, there’s a risk of a sharp reduction in the fund’s capital. This could, for example, happen if a global recession triggers both a decline in oil revenue and low or negative returns on the fund’s capital.”
Since President Trump’s surprise victory over Hillary Clinton in November, investors and management teams have been acutely focused on the new administration’s policy proposals. As expected, all 4 key themes discussed on Q4 conference calls are closely linked to Trump's policies and include tax reform, regulation, fiscal spending and trade policy.
S&P equity futures followed Asian and European stocks lower, driven by weakness in Franch and Italian markets, as French political concerns returned; the pound tumbled after UK monthly retail sales unexpectedly dropped pushing the dollar higher and Euro lower.