Canary Drilling Service’s CEO, Dan Eberhart, has put forward the possibility that oil prices could hit the $70 per barrel price by the autumn, citing the possibility that US producers have maybe gone too far in their production cuts.
Demand for oil dropped dramatically as many economies went into lockdown to control the spread of COVID-19. Faced by the double problem of very low oil prices and a shortage of storage, many US oil producers—such as ExxonMobil, which also makes lubricants like grease under the Mobil brand—began to pare back production.
Speaking to Market Insider, Eberhart said:
“When US production numbers comes out, we are going to find out the US producers have cut more production than they needed to so there is going to be a mini supply shock for the US oil market.”
He added that there was reason to believe that in the autumn, the price of West Texas Intermediate could tend towards $70 a barrel.
While considerable uncertainty persists, there is growing cause for optimism in the oil industry. Chinese demand is back to within 10% of its pre-pandemic levels, and as lockdowns are eased in many other countries, demand is tentatively picking up. Of course, no one can predict how long it will take global demand to return to pre-coronavirus levels. According to some, it may never fully recover, given that many of the habits people have acquired during lockdowns, such as home working, may persist to an extent.
