Published: Wed, April 19, 2017
Business | By Sandy Mccarthy

Oil hits 11-day low on expected surge in US shale output

Oil hits 11-day low on expected surge in US shale output

On the demand front, OPEC expects the world to need about 96.32 million barrels daily, a growth rate of 1.27 million bpd. Venezuela's volumes have been sporadic, but are still lower than last year's levels. ACG and its affiliates provide membership, travel, insurance and financial services offerings to over 9 million members across eleven states and two U.S. territories including Florida, Georgia, Iowa, Michigan, Nebraska, North Dakota, Tennessee, Wisconsin, Puerto Rico and the U.S. Virgin Islands; most of IL and Minnesota; and a portion of Indiana.

Moreover, "OPEC sees a world with supply still running ahead of demand, which will add about 280,000 bpd more to inventories".

"So that gives the market pause at how effective they're going to be at taking oil out of the market".

While compliance has been strong among Opec countries, production cuts have lagged among others that have agreed to act to curb oil prices, including Russian Federation.

Brent crude futures fell by 4 cents to $55.32 a barrel, while the US West Texas Intermediate (WTI) crude futures also fell 4 cents to get traded at $52.61 per barrel, reported Reuters. As of 09:18 GMT today, the price is lower again by 0.46% to $52.42/b. Explorers in the nation have added rigs for the past 13 weeks, data from Baker Hughes Inc. show.

Oil prices swelled to their highest levels since March 1.

"China's domestic oil production declines are worse than expected as mature fields like Daqing and Shengli continue to deteriorate", said Gordon Kwan, head of oil and gas research at Nomura.

Still, the "U.S. production story is one reason" for some weakness in oil prices Tuesday, said Flynn.

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By targeting USA refineries through the production cut, OPEC producers have more flexibility in fighting for market share in the growing Asia-Pacific market. What we have seen is that older shale rigs that were mothballed in late 2014 have been brought online and the new wave of rig openings will, if oil prices retreat, simply in turn be mothballed. not closed completely.

Julian Lee, oil strategist for Bloomberg First Word, notes that "the grand re-balancing of supply and demand has yet to take place" and that "the OPEC output cut was also meant to usher in a period when demand would start running ahead of supply, and when inventories would be reduced".

Chinese industry is not the growth engine it once was.

The increase comes after Organization of Petroleum Exporting Countries released its monthly report, which showed solid economic growth and higher gasoline demand in the US and Asia.

The market has been oversupplied for three years, prompting members of the Opec and some non-Opec producers to agree to cut output in the first six months of 2017 to rein in the glut. That is the highest in about two years. But the IEA has also noted that shale production in the U.S. (and elsewhere in the world where similar geology and topographies exist) is likely to undermine the deal.

Oil producers are showing "very good" compliance with pledged production cuts, Saudi Energy Minister Khalid Al-Falih said Monday in Riyadh.

While a number of critics and oil market analysts argue OPEC is destined to bomb in its market management, we could be seeing the cartel developing an effective new strategy toward the USA market, with other victories possible in the near future.

There is no oil crisis, there is no shortage. Goldman Sachs has also made similar comments, saying ample inventories that have undermined the output cuts are set to shrink and calling for more patience from the market.

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