Fracking Ramps Back Up As Crude Oil Becomes A Hot Commodity Again
The slow but steady growth seen by the U.S. oil and gas industry throughout the final four months of 2020 intensified in January, as oil prices saw double-digit increases.
Since January 1, the price for West Texas Intermediate has risen from $48.52 to over $58 as of this writing on February 9, a gain of more than 20%. According to Otavio Costa, a portfolio manager at Crescat, this is the strongest year-to-date performance for crude oil prices in the last 30 years.
The stronger price scenario has, as it generally does, led to rising numbers of active drilling rigs and frac spreads in the U.S., as upstream companies redirect more capital spending to their drilling programs. Last week, Baker Hughes BHI -1.2%reported that its rig count rose for the 11th straight week, and 22nd of the last 23 weeks. The total number of active oil and gas rigs in the U.S. as of last Friday is now 392 or 398 less than the same week last ye
Yves here. As this article makes clear, the current optimism about oil prices is based on some remarkable assumptions about Covid, namely that the US has attained herd immunity by summer as Biden warns vaccinations won’t be complete by the end of 2020…even assuming the dogs eat the vaccine dog food.
I thought readers would find it instructive to read why we will be back to the old normal by summer. It must be nice to live in such a comforting bubble.
By Irina Slav, a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice
Reuters Reuters
8 February, 2021, 4:11 pm
FILE PHOTO: Pump Jacks are seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson/File Photo
TORONTO (Reuters) – Hedge funds are turning bullish on oil once again, betting the pandemic and investors’ environmental focus has severely damaged companies’ ability to ramp up production.
Such limitations on supply would push prices to multi-year highs and keep them there for two years or more, several hedge funds said.
The view is a reversal for hedge funds, which shorted the oil sector in the lead-up to global shutdowns, landing energy focused hedge funds gains of 26.8% in 2020, according to data from eVestment. By virtue of their fast-moving strategies, hedge funds are quick to spot new trends.
Hedge funds are turning bullish on oil once again, betting the pandemic and investors' environmental focus has severely damaged companies' ability to ramp up production. Such limitations on supply would push prices to multi-year highs and keep them there for two years or more, several hedge funds said. The view is a reversal for hedge funds, which shorted the oil sector in the lead-up to global shutdowns, landing energy focused hedge funds gains of 26.8% in 2020, according to data from eVestment.