Saturday, 23 September, 2017

Oil Price, Dollar Creep Lower

Juana Turner | 21 March, 2017, 00:29

Oil prices also fell on Monday after reports indicated that OPEC did not cut production as much as originally promised and that USA drilling continued to increase.

Brent crude futures traded at US$52.02 a barrel at 1:51 p.m. Friday on the ICE Futures Europe exchange in London. On the New York Mercantile Exchange, West Texas Intermediate futures were trading.

In terms of output, the IEA noted that member countries of the Opec oil-producing cartel cut their production for the second month in a row.

Conversely, however, some analysts believe that while some big oil producers would take a hit, and inflation would fall sharply, global growth would be much less affected than it was two years ago, when oil prices slumped to a multi-year low.

Non-Opec oil supply is now projected to grow by around 400,000bpd this year to average 57.7mbpd, Opec said in said in its monthly market report.

The deal has lifted oil prices, but inventories in industrial nations are rising and higher returns have encouraged US companies to pump more.

Opec has raised its 2017 estimates for oil production from outside of the cartel as U.S. shale drillers ramp up activity in response to higher prices, underlining the threat to the group's attempts to balance the market.

The U.S. benchmark slipped below $50 a barrel on March 9 as oil executives gathered in Houston for the annual CERAWeek by IHS Markit conference.

Crude oil is likely to continue to drift lower over the near-term if supply continues to increase.

OIL prices traded little changed last Thursday, as support from a weaker dollar was offset by a stubbornly high level of United States inventories near record highs that suggested Opec-led output cuts were starting to drain supplies.

Baker Hughes reported that in the week leading up to 17 March, US shale companies added 14 oil rigs, increasing the number of operating rigs to 631, the most since September 2015.

OPEC oil producers increasingly favour extending beyond June a pact on reducing crude supply to balance the market, sources within the group said, although Russian Federation and other non-members need to remain part of the initiative. However, U.S. shale producers can't continue to increase their output indefinitely. Saudi Arabia's energy minister, Khalid Al-Falih, has said Opec will extend the deal if stockpiles are still above their five-year average. OPEC's next meeting is billed to hold on May 25 in Vienna, Austria and analysts are already speculating on the possibility that OPEC will deepen its cuts above 1.2 million barrels or extend the cuts beyond six months. Crude oil inventories have risen by ~50 million barrels in the United States so far this year.

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