Oil price falls as growing United States output weighs

by Frankie Norman January 23, 2018, 1:31
Oil price falls as growing United States output weighs

Here's our take on the situation and why we believe that this could be the actual turnaround for the oil and gas markets. "As for efforts to coordinate joint actions on the oil market, the previous year showed that this is a successful experiment", he told reporters, according to Russia's RIA Novosti news agency.

Oil prices are down by more than one per cent today as investors fear increased production in the U.S. will overshadow the Organisation of the Petroleum Exporting Countries' (Opec) efforts to reduce the global supply glut.

Global demand for oil is forecast to grow by 1.3 million barrels a day, the same as the year before. "But prices have rallied almost 50% since the middle of the year on robust demand and strong conformity with the production reduction", it said. OPEC's reluctance to cut output was also seen as a key reason behind the fall.

The monitoring committee meets this weekend in Oman to work through the figures and examine compliance.

With the opening of the Forcados terminal, crude oil exports rose to 1.93 million barrel in September and Nigeria was brought into the supply cap deal when OPEC and non-members met on November 30. This is more than the reduction in inventories announced on the eve of the American Petroleum Institute (5.12 million barrels), and more experts forecast (3.5 million barrels).

Mr. Falih dismissed shale producers as a threat, saying investments in their business in recent months were "hyped".

The price of crude has risen about 50 per cent since June, with the USA benchmark now trading around $63 United States a barrel, on evidence of strong global economic growth and a pact among OPEC countries and Russian Federation to limit their production.

However, during the last sessions, slight downward adjustments are observed. The U.S. shale industry offset the declines by around 60 percent of the production cuts, growing 600,000 barrels a day past year. On such background, the higher oil prices are now only stimulating USA shale oil producers, overshadowing the OPEC's efforts to control excessive production.

U.S. crude oil production is averaged at an estimated 9.3 million barrels per day (b/d) in 2017, and is estimated to have averaged 9.9 million b/d in December, according to the U.S. Energy Information Administration. This suggests that shale could have a healthy growth this year. Rather than flooding the markets with their shale output and causing the oil prices to decline, they are likely to plan their output expansion judiciously, conserving much of their cash flows for capital investments in the future years.

However, when asked at what stage oil traders could expect OPEC to begin phasing out the current level of production cuts, Mallinson said the major oil producing group would need to wait until the middle of 2018 before it could "confidently" feel the market had leveled out. The oil prices have jumped over 40% since the first announcement of these production cuts. The recovery in prices over the past two years has underpinned a steady increase in the number of active drilling rigs.

Mr Atkinson revealed the IEA is expecting a "wave of new production" in the coming months.

WTI Crude oil slipped from three year highs above $64 per barrel.

Meanwhile, OPEC has raised its forecast for oil supplies from countries that are not members of the cartel. As of early Friday, Brent was trading closer to $69 per barrel.


TOP News

Google Play Store To Add Audiobooks Sometime Soon

Trump's leaked nuclear report suggests Russia has a doomsday device

Psychiatrist on House of Horrors Shocker: 'Don't Confound this with Homeschooling'

Twin Cities doesn't make the cut for new Amazon HQ

World's Regard For US Leadership Hits Record Low In Gallup Poll

Nuclear capable ballistic missile Agni-V test-fired

Kim Kardashian May Have Just Teased Baby No

Here's the reason why WhatsApp became 'obsolete' on Xiaomi smartphones

Here's the impact the government shutdown is having in Florida's national parks

Roy Halladay had morphine, amphetamines in system at time of plane crash