1 day ago
US crude production flat --oil rigs coming back?
Despite a ramp up in oil demand in recent months, wildcatters in West Texas are not firing up rigs like they used to and production remain down 15% from a peak seen last year. This pushes US crude prices higher. Some say we could see, for the first time in 5 years, West Texas Intermediate oil going neck-to-neck with Brent. The result is a growing backwardation in the U.S. oil futures market where oil for prompt delivery is more expensive than later-dated contracts. That’s prompting traders to sell their barrels now rather than hold them for later. The relative enthusiasm for WTI is also showing up in where traders are deploying their money. Total open interest across all WTI contracts rose above that of all Brent futures months for the first time since 2018 last month. WTI open interest is up about 15% this year, while Brent is only up 1%.