Supply / Demand has tightened in SeptemberI am linking a chart showing the supply / demand imbalances in the world oil market. In August the supply surplus was about 2.4 million barrels. In September that has shrunk to 1.16 million barrels.
Supply demand chart: https://www.artberman.com/wp-content/uploads/Chart_Prod-Cons-Surplus.jpg
US shale is and will continue to collapse. Rig counts way down and still dropping. Shale wells have an extremely high decay rate eg ~75% the first 12 months! (see link) https://www.thestreet.com/story/13080666/1/dan-dicker-on-why-shale-oil-is-a-ponzi-scheme.html
Most shale has been financed by junk bonds and is not profitable. That bird is now coming home to roost.
The EIA is predicting US production will be 200k less by this time next year. This is absurd. US production will be at least a million less by this time next year. Production has already dropped by 600k from April to September. The weekly oil reports are not believed anymore because they are revised down later when the monthly reports come with harder data. Today the report said production climbed week to week. Two months from now the monthly report will say it declined.
Another thing to consider is spare capacity. SA is pumping full out. Maybe they have another million in reserve though I have seen many question this. Other times the oil price collapsed and couldn't get back up there was massive spare capacity.
SU is trying to buy COS at the absolute low in the oil market and have moved because they see the writing on the wall of higher oil prices to come. COS would increase SU’s production by 15% though SU is only offering 8% dilution. What thieves!