Optimism among ASX-listed oil juniors is growing despite a few price wobbles this week.

One has even picked July as the month when the tide turns and rivers of capital will run back into a sector that’s been on hold for five years.

But it all depends on oil prices, which have lost about 6 per cent since Friday after Saudi and Russian oil ministers met to discuss moderating OPEC’s production curbs.

OPEC and Russia together account for half of global oil volumes.

Oil bull Goldman Sachs is sticking to its optimistic stance — reiterating its $US82.50-a-barrel Brent price forecast for the third quarter of 2018. Some analysts see the price going even higher.

Among Australia’s oil small caps the atmosphere is buoyant as capital seeps back into juniors and a structural shortage in global oil supply is beginning to appear.

>> Scroll down for a table of ASX-listed oil juniors and their recent share price performance

Key Petroleum (ASX:KEY) managing director Kane Marshall told Stockhead last week he thinks the sector may bounce as soon as July — once the new financial year starts and as junior explorers’ investment credentials are re-rated.

His optimism is matched by Triangle Energy (ASX:TEG) boss Rob Towner, who says a shift back into Aussie oil has already started.

“The whole tide is changing and ultimately I couldn’t agree more,” he told Stockhead.

“The deal that Buru Energy (ASX:BRU) did last week… it’s a sign that there’s money out there if the project is right.”

Habour Energy’s $US14.4 billion bid for Santos (ASX:STO), even if the target is playing hard to get, shows there is interest for oil again.

Mr Towner says interest will begin to trickle down to smaller companies until people decide to stop investing and start looking for oil themselves.

“People are sniffing around.”

The structure of the industry will have an impact on who gets what.

Majors like Woodside (ASX:WPL) are still repairing their balance sheets, while most mid-tier Australian companies didn’t survive the five year valley of death since oil prices fell in 2014.

But while many believe funding for oil juniors is coming back, Carnarvon Petroleum managing director Adrian Cook says he raised money two weeks ago and investors are still leery of pre-revenue explorers.

They are keen on producers and explorers with projects that are close to production, though.

The million dollar question

The million dollar question is what will the oil price do.

If it drops back again, local oil companies can kiss dreams of a return to long liquid lunches goodbye.

But in spite of the Saudi-Russia meeting-inspired correction over the weekend, down to $US75.17 for Brent and $US66.24 for WTI, Australian oil execs are bullish prices will stay high.

Here’s a graph showing the price of West Texas (the US oil benchmark) over the past three months:

The price of West Texas crude – the US benchmark – dropped off last week after a steady rise.

And here’s a graph of price of Brent (the US oil benchmark) over the past three months:

The price of Brent - the global oil benchmark - over the past three months.
The price of Brent – the global oil benchmark – over the past three months.

Last week’s meeting was to discuss proposals that OPEC raises production to replace declining volumes from Venezuela and a potential halt in supply from Iran.

Mr Cook believes that with OECD oil storage at 61 days of supply or a three year low, according to the EIA, the correction over the weekend was an overreaction.

“It probably made sense for those two oil super powers to come together, the way that inventory levels are dropping, a coordinated increase in supply makes sense to stop us getting into a demand side bubble,” Mr Cook said.

Blue Energy boss John Phillips agrees, saying a structural oil shortage has already started to appear.

Demand is rising at 1.3 per cent a year, but reserves are not being replaced: consultancy Rystad said last year the number of oil discoveries in 2017 was the lowest since the 1940s.

OECD oil storage is now at, or slightly below the five-year average, Mr Phillips said in the last Blue Energy quarterly report.

“There will be a price response as supply lags consumption, and that has started happening, we’re in balance,” he told Stockhead.

As such, conditions may be right to flush some blood back into Australia’s desiccated oil sector.

Here’s a table of ASX-listed oil juniors and their recent share price performance:

ASX code Company One-year price change Price May 28 Market Cap
BYE BYRON ENERGY 2.38383838384 0.335 236.3M
HZN HORIZON OIL 1.5 0.135 175.8M
HE8 HELIOS ENERGY 1.375 0.057 84.9M
BUL BLUE ENERGY 1.36363636364 0.13 150.1M
FDM FREEDOM OIL AND 1.25 0.27 259.5M
TEG TRIANGLE ENERGY 1.20930232558 0.095 20.9M
REY REY RESOURCES 1.2 0.22 46.7M
OEL OTTO ENERGY 1.16666666667 0.065 102.6M
EXR ELIXIR PETROLEUM 1.12121212121 0.07 15.5M
BRU BURU ENERGY 1.04419889503 0.37 164.2M
BAS BASS OIL 1 0.004 13.0M
ATS AUSTRALIS OIL & 0.702127659574 0.4 375.4M
CVN CARNARVON PETROL 0.506024096386 0.125 155.6M
TDO 3D OIL 0.413043478261 0.065 14.5M
EOR ENHANCED OIL & G 0.333333333333 0.008 7.9M
BRK BROOKSIDE ENERGY 0.3 0.013 12.8M
AVD ANTILLES OIL AND 0.235294117647 0.021 3.4M
GBP GLOBAL PETROLEUM 0.2 0.03 6.1M
ELK ELK PETROLEUM 0.138461538462 0.074 111.6M
AOW AMERICAN PATRIOT 0.08 0.027 7.0M
TAP TAP OIL 0.0735294117647 0.073 31.9M
SEA SUNDANCE ENERGY 0 0.069 494.5M
LKO LAKES OIL NL 0 0.002 82.9M
KEY KEY PETROLEUM 0 0.009 12.1M
JKA JACKA RESOURCES 0 0.002 1.5M
CTP CENTRAL PETROL -0.00602409638554 0.165 116.7M
COE COOPER ENERGY -0.0217391304348 0.36 576.4M
ICN ICON ENERGY -0.0769230769231 0.024 14.3M
IPB IPB PETROLEUMI -0.105263157895 0.017 2.9M
WBE WHITEBARK ENERGY -0.125 0.007 6.9M
BUY BOUNTY OIL & GAS -0.142857142857 0.006 5.7M
88E 88 ENERGY -0.166666666667 0.04 222.3M
ABL ABILENE OIL AND -0.222222222222 0.007 2.4M
KPL KINA PETROLEUM -0.29 0.071 27.2M
TMK TAMASKA OIL & GA -0.333333333333 0.002 3.9M
PSA PETSEC ENERGY -0.333333333333 0.1 34.5M
OEX OILEX -0.4 0.003 6.0M
SGC SACGASCO -0.420289855072 0.04 10.0M
MAY MELBANA ENERGY -0.421052631579 0.011 18.3M
TPD TALON PETROLEUM -0.428571428571 0.004 4.1M
RRS RANGE RESOURCES -0.428571428571 0.004 30.4M
WEL WINCHESTER ENERG -0.5 0.04 12.0M
TNP TRIPLE ENERGY -0.75 0.06 2.6M
WOF WOLF PETROLEUM -0.757575757576 0.008 6.2M
JPR JUPITER ENERGY -0.792 0.052 8.0M
FPL FREMONT PETROLEU -0.8 0.008 6.1M