Oil prices have fallen back at the start of this week despite heightened geopolitical risk after Iran attacked Israel with more than 300 missiles and drones. Traders appear to be focused on fundamentals, awaiting a more tangible event for oil markets before pushing prices any higher
For the first time in more than a year, the US count of drilled-but-uncompleted wells (DUCs) rose in March to 4,522, up 9 wells compared to February, signaling that US production growth is stalling.
Usually, when companies start to build up fracklogs, it is an indication that companies wait for periods of higher prices or, in the case of the US, easier access to pipelines, but this year neither of those seems to be pertinent.
The EIA expects US shale oil production to be steady at 9.86 million b/d, below the 10 million b/d record pace seen in December, with the Permian Basin stagnating, too.
Only Niobrara and Eagle Ford saw their DUC count decline last month, even the Permian Basin which cleared more than 550 wells from its fracklog since 2022 saw its DUC count move up by 4 wells.
Market Movers
US natural gas firm EQT (NYSE:EQT) agreed to sell its 40% non-operated interest in the Marcellus and Utica basins in exchange for Equinor’s (NYSE:EQNR) onshore assets in the Appalachian basin and $500 million in cash.
French oil major TotalEnergies (NYSE:TTE) signed a memorandum of understanding with Algeria’s NOC Sonatrach to develop gas fields in the Timimoun region, concurrently expanding its LNG deal with Algeria through 2025.
Brazil’s President Lula called off plans to sack Petrobras (NYSE:PBR) top executive Jean Paul Prates, but there is still no clarity on the company’s dividend policy ahead of its April 25 shareholder assembly.
The oil markets closely monitored Iran’s retaliatory strikes over the weekend and, at least for the time being, risks of a wider regional conflict have subsided this week, sending Brent back to $90 per barrel. There are still plenty of bullish factors to look out for, most notably the price might swing up should the US decide to sanction Venezuela again, a decision due on April 18th.
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