3. Companies are finding lots of oil again
Crude oil prices look to be decoupling from oil and gas supply again in 2019. Brent, the global benchmark, is trading above $70 a barrel on international markets.
- Supply cuts from OPEC and major producers like Russia have driven a 30% rally in Brent crude prices this year, despite fears of an economic slowdown and a strong dollar, which typically weighs on the value of oil.
The big picture: The run-up in prices so far comes despite global discoveries of oil and gas reaching 3.2 billion barrels of oil equivalent in the first quarter. Most of the gains were recorded in February, when 2.2 billion barrels were discovered — the highest since August 2015, Rystad Energy said in short note.
Quick take: The big finds are another sign that fears of a crude supply crunch opening up by the early 2020s likely won't come to pass, Axios' Ben Geman writes.
- Some analysts feared a precarious situation emerging because spending on finding and developing new supplies cratered around 2014.
- But 2019 is set to be third straight year of upstream investment increases, per the International Energy Agency.
- Bigger-than-expected U.S. shale growth has also eased concerns.
What's next: "[T]he push for substantial new discoveries shows no signs of slowing down, with another 35 high impact exploration wells expected to be drilled this year, both onshore and offshore," Rystad said.
But, but, but: "Forecasts of a supply gap persist, but they’re being pushed further out into the future," Bloomberg reported in late January, and the IEA has warned against complacency.