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US energy secretary predicts secure future for oil

Dan Brouillette, who has been Donald Trump’s energy secretary since December last year, has expressed confidence that the oil sector will soon bounce back from the recent extensive losses.

The ongoing coronavirus pandemic and the resulting lockdowns have led to a drastic reduction in the demand for oil. This, on top of an existing oversupply problem, led to oil prices plummeting and even going negative for the first time.

The oil markets have since made a tentative recovery as a degree of optimism starts to emerge. The OPEC+ group has made drastic production cuts, while other producers like the US have seen production fall as operators pumped less in response to market forces.

Demand is also likely to increase again as more economies reopen, as pointed out by Brouillette while speaking on Bloomberg Television:

“We now have 23 states that are opening up their local economies. That represents roughly 40% of the gasoline demand in the United States. We’re starting to see oil prices stabilise.”

He later said about the market’s immediate future:

“The third and fourth quarters in 2020 and certainly into 2021 are going to be very, very robust.”

Brouillette predicts that production will start to come back online as demand increases. With more economic activity, the demand will increase not just for fuels but also the derived oil products of companies like Shell, such as cutting fluid and compressor oil for industrial use. He refuted suggestions that production might bounce back too soon and threaten the recovery, however.

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