Opec greases the wheels of USA shale boom

"With the market still digesting the big increase in inventories, oil prices are likely to remain under pressure today", ANZ bank said in a note.

"OPEC heavyweights such as Saudi Arabia are not happy with the return of shale oil in full force and have to make a hard choice between losing part of their market share or steady income", said a source from a major non-Gulf OPEC producer.

OPEC and its allies agreed in December to reduce output by almost 1.8 million barrels a day in the first half of the year to rebalance the market.

"An extension is needed to balance the market", an OPEC delegate said.

On the New York Mercantile Exchange, the West Texas Intermediate crude April contract fell 0.69% to $48.97 a barrel. Total volume traded was about 33 percent below the 100-day average.

On London's Intercontinental Exchange global benchmark Brent for May delivery rose 0.04% to $51.76 a barrel.

"The outlook is no less bullish", said Seth Kleinman, global head of energy strategy at Citigroup, who sees crude exceeding $60 a barrel later this year.

Al-Falih on Thursday said that he wants to signal to the market "that we're going to do what it takes to bring the industry back to a healthy situation". "However, he did reiterate that the market is now going in the right direction and fundamentals had improved".

OPEC and non-OPEC producers such as Russian Federation agreed in November a year ago to reduce output by nearly 1.8 million barrels per day to 32.5 million for the first six months of 2017, but so far the move has had little impact on inventory levels. The rebound in U.S. drilling will slow down before output can make up for Opec's reductions, according to Morgan Stanley, which sees Brent reaching $62.50 a barrel by the end of the year.

Since December, when the cuts were announced, Asia has seen its supply increase by 3% to 714 million barrels, according to Thomson Reuters Oil Research and Forecasts data, reports the Economic Times.

Reacting to the oil glut, financial oil traders cut their net long U.S. crude futures and options positions in the week to March 14, the third consecutive reduction, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

‧ BP PLC is in talks with Ineos AG to sell the Forties pipeline, one of the most important pieces of oil infrastructure in the UK's North Sea.

Crude could remain in a narrow range, much like last week if investors continue to weigh the impact of the first oil cut from OPEC against the rising USA shale oil output and high inventories.

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