Crude halts decline as demand seen burning through shale output

JPMorgan’s Scott Darling says Brent may reach $75 in second quarter

Having cut costs during a three-year market slump, US shale companies are able to deliver even more oil as recovering prices fund new drilling, it said.

The IEA says that the stars are aligning for US shale, with "rising prices leading, after a few months, to more drilling, more completions, more production, and more hedging".

The IEA said oil prices, which briefly touched a high of $71 a barrel in January, could be supported even if United States production rises, provided global growth remains strong, or if unplanned supply outages persist.

The Paris-based IEA said Tuesday that the current situation is "reminiscent" of a wave of USA shale growth that preceded the 2014 crash in energy prices. Demand is set to grow by 1.6 million barrels a day in 2018, the same level as last year, and crude inventories are continuing to dwindle as OPEC and its allies pursue their output cuts until the end of the year, according to the producer group.

The American Petroleum Institute (API) said on Tuesday that USA crude inventories rose by 3.9 million barrels in the week to February 9, to reach 422.4 million. The cartel now sees non-OPEC production rising by 1.4 million bpd, up by 250,000 bpd from its January report.

The IEA released a monthly market report where it stated that oil demand increased at a rate of 1.6 million barrels per day in the previous year. However, its efforts have been dogged by fears that a higher price will benefit rival producers in the U.S. and lead to a resurgence...

On Monday, OPEC announced its expectation that global demand would increase by 1.59 bpd in 2018, to 98.6 million bpd.

Crude markets began to steady yesterday, settling little changed on the day as global equities began to recoup some losses from their biggest one-week decline in two years.

Crude oil prices moved moderately lower in early Thursday trading, though strong US oil output was offset somewhat by good economic news.

The higher revenues are the result of the $15-$20 increase in oil prices, compared to the price of oil before the deal between OPEC and a dozen non-OPEC nations led by Russian Federation was signed, the minister said.

OPEC and other major producers including Russian Federation agreed to slash their output in late 2016 in order to reduce the glut and help boost prices.

Meanwhile, March West Texas Intermediate crude (WTI) added 32 cents (0.54%) to settle at $59.61 a barrel, near the day's low of $59.29.

"We've been under pressure.it's all been a function of the IEA report", said Bob Yawger, director of energy futures at Mizuho.

Having reduced their operating costs dramatically, U.S. E&Ps "are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth". Now, history could be repeating itself.

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