Oil prices continue to hover near $57. Support continues to come from geopolitical worries over Yemen and the broader Iran-Saudi Arabia proxy war. In addition, the Saudi officialdom are talking up the market, once again, claiming that the market is “perfect.” They are obviously quite pleased with themselves. After all, prices have rebounded smartly, and the Saudis have not lifted a finger to do so; in fact, they are producing more, not less, and at record levels. They have succeeded in squeezing out the US shale producers, based upon the plunging US oil rig count, and the market is figuring in a supply response, which has not materialized in actuality. That is the most difficult part to square with the rebound. US oil output has only fallen marginally, at best.
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