Petrobras Reduces Diesel Prices: Brazilian state-controlled oil company Petrobras announced a reduction in diesel prices to distributors by an average of 0.12 real ($0.0205) per liter, effective the following Friday. This decision follows a recent decline in crude oil prices, influenced by tariffs imposed by U.S. President Donald Trump on several countries beginning April 2. Petrobras Chief Financial Officer Fernando Melgarejo attributed the price cut to shifts in the exchange rate and Brent crude oil prices, affirming that the decision aligns with their fundamentalist pricing analysis. Speculation about a potential fuel price drop had grown earlier after Brazil’s Mines and Energy Minister Alexandre Silveira discussed the matter with Petrobras CEO Magda Chambriard. Despite the reduction, Eduardo Oliveira de Melo of Raion Consultoria noted that Petrobras's move was conservative and that their analysis suggested a possible reduction of up to 0.30 real per liter.
U.S. Rig Count Increases: For the first time in four weeks, U.S. energy firms have added oil and natural gas rigs, according to Baker Hughes. The total rig count rose by two to 585 for the week ending April 17, although it remains 34 rigs or 5% lower compared to the same period last year. Oil rigs increased by one to 481 and gas rigs by one to 98. The Utica shale basin, covering parts of Ohio, Pennsylvania, and West Virginia, saw a notable increase with two new rigs, reaching a total of 13—the highest since February 2024. Despite recent rig additions, overall rig counts have declined by roughly 5% in 2024 and were down 20% in 2023, with companies focusing on debt reduction and shareholder returns instead of production expansion.
U.S. Oilfield Services Firms Brace for Earnings: In U.S. oilfield service companies, including Halliburton, Baker Hughes, and SLB, are preparing to report earnings next week amid ongoing tariff-related uncertainty and fluctuating oil prices. Since President Trump's administration imposed tariffs and sparked a global trade war, Brent crude prices have decreased from $80.15 per barrel in early 2017 to about $66.65, after dipping to $58.40 earlier this month. This downturn, coupled with increased output from OPEC+, has pressured oil prices and caused upstream investments, particularly in U.S. shale, to decline. Producers are now prioritizing debt reduction and shareholder returns, affecting demand for oilfield services. Analysts caution that prices falling below $60 per barrel could result in a 20% drop in domestic oilfield activity.
Market Overview: WTI crude oil prices are experiencing an upward trend, marking a 3.54% increase. This rise is attributed to renewed optimism overpotential trade deals and the imposition of new sanctions on Iran, which have tightened supply expectations. The market's positive sentiment is further bolstered by China's increased crude imports, signaling robust demand. However, the global oil landscape remains complex, with factors such as U.S. tariffs and OPEC+ production strategies influencing price dynamics. In the United States, oilfield service companies are cautiously approaching upcoming earnings reports amid tariff-related uncertainties. Meanwhile, Brazil's Petrobras has reduced diesel prices in response to earlier declines in crude oil prices, reflecting the interconnectedness of global markets. Overall, the oil and gasoline markets are navigating a multifaceted environment, balancing supply constraints and demand fluctuations.
Crude Movement Since January 20th
From an operational efficiency standpoint, the Permian region demonstrated remarkable productivity gains in 2024, driving nearly all of the 270,000 b/d growth in U.S. crude oil output despite a reduced rig count. Technological innovations like AI-driven drilling and advanced hydraulic fracturing allowed producers to extract more oil with fewer rigs, averaging 308 in the Permian—over half the nation’s total. While the Eagle Ford and Bakken regions each maintained a 9% share of total U.S. crude oil production, their output remained relatively flat, with only modest increases of 13,000 b/d. Both regions also saw reduced rig activity, indicating a cautious approach despite stable production levels. The favorable economics in the Permian, with WTI prices well above breakeven thresholds, continue to make it the most attractive and productive U.S. oil basin.
The New York Mercantile Exchange (NYMEX) was closed today in observance of the Good Friday holiday, resulting in no market close and pausing futures trading and contributing to lower market volatility. Despite the closure, global oil traders remain focused on OPEC+’s decision to move forward with its phased production increases, adding to concerns of a potential oversupply later in the year. Ongoing international trade disputes, particularly tariffs imposed by China and Canada on U.S. goods, are also weighing on future demand expectations. Analysts at Goldman Sachs maintain a bearish long-term outlook, forecasting WTI prices to fall to $55 per barrel by 2026. Meanwhile, the U.S. oil rig count saw its first increase in four weeks, but remains lower year-over-year, highlighting the industry’s continued emphasis on capital discipline. The EIA projects only as light increase in domestic production in 2025, reflecting subdued momentum across the upstream sector. These developments suggest that while WTI prices may see short-term stabilization, structural pressures remain in place.