Market Overview

Clarksons Platou Asks What, If Anything, Changes With Oil At $50?

Share:
Clarksons Platou Asks What, If Anything, Changes With Oil At $50?
Related USO
Technical Alert: Crude Lower
The Market In 5 Minutes: McDonald's, Halliburton Ramp Up Q4 Earnings Season
COT Report: Money Managers Were Buying Oil, Precious Metals And Agricultural Commodities Except Wheat (Seeking Alpha)

Clarksons Platou said oil breaking the psychological $50 barrier alone is not enough to boost operator spending.

Last week, brent crude crossed $50 for the first time since the fourth quarter of 2015, but has since retreated.

"We consider $50/bbl a key psychological barrier in the global energy landscape. While significant, we would not expect $50/bbl oil alone to stimulate incremental spending among operators; many have said time and again that elevated crude prices need to be sustained," analyst Haithum Nokta wrote in a note.

Nokta continues to expect the deepwater arena will stay in rationalization mode until development costs become more manageable. However, at the $50/bbl level, Nokta believes that high quality North American oil producers would begin to inch into increasing activity levels.

"If a more significant ramp in 2H16 activity levels were to materialize, we would expect limited fundamental upside from $50 since much of the oil discourse has revolved around declining US production and activity levels," Nokta added.

Currently, brent crude is down 1.24 percent to $49.27.

Posted-In: Clarksons Platou Haithum NoktaAnalyst Color News Commodities Markets Analyst Ratings Best of Benzinga

 

Related Articles (USO)

View Comments and Join the Discussion!