Yesterday’s private oil data brought some surprising numbers to light. Initially, crude stocks showed an increase of 4.247 million barrels. On the other hand, gasoline stocks fell by 4.56 million barrels, while distillates saw a minor rise of 421,000 barrels. Intriguingly, before this report hit the newsstands, WTI crude oil had already surged by $1.04, reaching a price of $67.30. This uptick suggests we’re entering a period where crude oil traditionally performs well.
In another noteworthy development, Scott Sheffield, who once led Pioneer before its acquisition by Exxon, made a notable remark. He highlighted a looming challenge for the U.S. oil sector. According to him, the company, along with others in the industry, could exhaust its Tier 1 inventory by 2028 and Tier 2 by 2032. This paints a sobering picture of the future of domestic shale oil reserves.
He emphasized this point by stating, “One of the main reasons that Pioneer sold was…we were running out of Tier 1 inventory. Everybody is running out of Tier 1 inventory. People don’t talk about the fact that we are running out of inventory.”
Sheffield also pointed out a key financial shift, arguing that today’s $65/barrel oil price packs the same punch as $50 did before the pandemic hit. His commentary suggests that the once-promoted ‘drill, baby, drill’ philosophy might not hold much water in the current landscape. This comment underscores the transformed dynamics in the oil industry post-COVID and raises questions about future strategies.
