The world’s oil market is rebalancing faster than expected due to several serious outages, but for now there is enough oil in storage and excess capacity to keep prices from spiking.
“We’ve strung together an impressive number of outages and supply disruptions for the moment, but there’s every incentive in the dire straits the industry’s been in to get these barrels on line,” said John Kilduff, partner with Again Capital.
Outages and supply disruptions in Canada, Nigeria, Venezuela, and other producing regions have reduced oil production by an estimated 3.8 million barrels a day. Some of those outages should be temporary, and could bring a wall of oil back to the market once they are resolved. There is also the potential for more production from Saudi Arabia, Iran and even the U.S. – if prices rise enough to enable America’s shale producers to restart some drilling.