This Week’s Market Buzz

• At press time, WTI Crude Oil was sitting at $55.14, while Brent Crude was at $61.36. There are two forces at work in the oil markets today creating a tug of war, according to media sources. On the one hand you have U.S. shale producers on a quest to reach 10 million barrels a day in production amid falling seasonal demand. On the other hand you have the perception that the oil glut that has gripped the world over the last few years is coming to an end because of OPEC restraint and increased demand from improving economies.

• OPEC just significantly overhauled its expectations for North American shale, projecting strong supply growth through the early 2020s. The revision came as part of OPEC’s World Oil Outlook (WOO), and it represents an acknowledgment from the cartel that it has failed to kill off U.S. shale by flooding the market. The 2017 WOO predicts North American shale output will rise from 5.1 mb/d in 2017 to a massive 7.5 mb/d by 2021 and 8.7 mb/d in 2025. The 2021 figure is 56 percent higher than last year’s forecast.

• Increased drilling activity in the Montney, Duvernay and Deep Basin plays in Western Canada is driving significantly improved financial performance for Source Energy Services. The company, which delivers Source White frac sand to the Western Canada Sedimentary Basin from Wisconsin, reported a 255 percent increase in sand sales in the third quarter of 2017 compared to the previous year. The company sold 510,446 metric tonnes of sand in the third quarter of 2017, compared to 157,210 metric tons in the third quarter of 2016. This generated $62.2 million in sand revenue in the third quarter of 2017, up from $19.1 million in the third quarter of 2016, contributing to Source’s 2017 third quarter net income of $3.0 million, compared to a a net loss of $12.3 million in the previous year period.

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