The oil markets have taken on a more positive tone in the last month as inventories are experiencing large drawdowns, OPEC has decided to restrict production through the end of the year, and tensions continue to mount around the Strait of Hormuz.
We feel this bodes well for oil prices to remain around the $60 mark for WTI for an extended time. We have long used $60 oil as the basis of most of our estimates and projections, and for overall oil geopolitics. $60 prices provide ample profits for producers in the Permian Basin, and keep pressure on most other producers all over the world – including the Saudis.
We look forward to earnings season near month end, and hope you are enjoying a good summer.