Rising US shale-oil output threatens OPEC's production pact

Brittany BishopJan 18, 2017

Saudi Energy Minister Khalid al-Falih said that the Kingdom would adhere to its pledges, expressing confidence that OPEC's plan to prop up prices would work.

Brent crude, the global benchmark, lost 39 cents, or 0.7%, to $55.47 a barrel on ICE Futures Europe.

Traders are also watching rising USA output with interest, as this could offset supply cuts elsewhere.

Crises-struck OPEC member Venezuela will "soon" begin another tour among major oil producing countries to circulate a new proposal to stabilize crude oil prices, the country's president, Nicolas Maduro, said Sunday, Kallanish Energy reports. Russian Federation and other key exporters outside OPEC have said they will also cut output. Falih said that OPEC and non-OPEC producers are unlikely to extend their agreement to cut oil output beyond six months, especially if global inventories fall to the five-year average. Some important non-OPEC producers, including Russian Federation, have said they will also cut output.

While there are no firm numbers for Organization of the Petroleum Exporting Countries production, optimism is growing that the majority of members will actually make cuts as promised in its November meeting.

OPEC is confident oil prices will remain stable throughout 2017.

US oil output is now at 8.95 million bpd, up from less than 8.5 million bpd in June a year ago and generally at levels in 2014, when overproduction sent the market into a tailspin.

Data from the U.S. Energy Information Administration showed crude production rose notably last week, particularly in 48 southern states.

Production in the USA has increased by about 460,000 barrels a day, or 5.4 percent, in the past six months after falling by nearly 600,000 barrels in the first half of a year ago.

"U.S. shale is coming back, but it isn't roaring back at current prices of $50 to $55 a barrel", BP's Dudley said. Oil prices have slumped 5 percent in the first few weeks of the year.

Like Falih, Birol supported his argument by pointing out that declining global investment in oil development in 2015-2016 is without precedent, and that following this period was two years of collapsed prices that discouraged exploration and led to no large discoveries. "The physical effect of the deal would increase oil price more by clearing the glut in markets", Iran's state-run IRIB TV quoted the minister as saying.

Related Articles:



« Previous article


Popular Pages

Newsmaker - Luxottica's merger helps Del Vecchio manage family risks
Del Vecchio, a child orphan who spent some of his childhood in a poorhouse, is Italy's richest man, worth more than €20 billion. Essilor said the merger is created to meet growing global demand for corrective lenses, sunglasses and luxury frames.

SpaceX Successfully Returns To Space
The launch's success Saturday was made even sweeter by a smooth return landing for the Falcon 9 rocket's first stage booster. EST (1754 GMT) on Saturday, and successfully launched all the satellites in Earth's low-orbit 59 minutes after the lift off.

False Killer Whales Die In The Everglades After Pod Becomes Stranded
It can take months for results to come back and even then, a cause of stranding is not guaranteed, according to Mote. Seventy-two were found dead and 10 were euthanized by veterinarians on the scene after being found in poor condition.

Christmas clothing cheer for M&S
It cautioned over a knock-on hit to fourth quarter figures due to the timing of sales as well as a later Easter this year. He added the group would plough on with its restructure plans "against the background of uncertain consumer confidence".

BMW Pushes Back After Trump Threatens Tariffs on Its Mexico Cars
According to them, Trump's characterization of vehicle sales as a "one-way street" is all down to American automakers. When asked what Trump should do to get more Germans buying American cars, his answer was: " Build better cars ".

Dallas Cowboys RB Ezekiel Elliott comments on minor fender bender
He finished with 1,994 all-purpose yards and 16 touchdowns, helping Dallas earn the No. 1 seed in the NFC with a 13-3 record. Elliott has been dealing with these questions since training camp, but it hasn't affected his play on the field.

Carroll screamer inspires West Ham to victory
The playmaker was rewarded with a new West Ham contract in February of previous year , meaning he is tied to West Ham until 2021. The West Ham number nine got up well to head at goal, but Tomkins rose bravely to deflect his effort behind for a corner.

Floyd Mayweather Says Conor Mcgregor Offered £12m To Fight Him
And we'll talk about Pay Per View and a certain number. "Conor's last two pay-per-views did 1.3 million and 1.5 million buys". Furthermore, in his last fight against Andre Berto in September 2015, Mayweather was guaranteed a purse of $32 million.

Japan's bid to launch world's smallest satellite-carrying rocket fails
But Japan Aerospace Exploration Agency authorities declared on Sunday that the mission failed. The rocket and its tiny payload then tumbled into the sea.

Gangasagar stampede: Narendra Modi mourns loss of lives
Six persons have been killed and 15 others have been injured in the stampede that took place near Kochuberia in Sagar Islands. The area where the stampede occurred is about 120 kilometers (75 miles) south of Kolkata , the capital of West Bengal state.