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Crude Oil Price Rises By 3% as US Shale Shows Signs of Slowdown

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  • Crude Oil Price Rises By 3% as US Shale Shows Signs of Slowdown

Crude oil price rose by around three per cent Tuesday, a day after United States oil producer Anadarko said it would cut capital spending plans and Saudi Arabia vowed to reduce crude oil exports to help curb global oversupply.

The global benchmark, brent crude futures, rose $1.37 or 2.8 per cent to $49.97 a barrel, while the US West Texas Intermediate futures rose $1.39 or 3 per cent to $47.73 a barrel.

Lower oil prices in June and July may be affecting US shale production, Reuters quoted Mark Watkins, regional investment manager at US Bank as saying.

“Companies are not drilling as fast they had been in the beginning of 2017. They are not producing as much because it’s much less profitable with prices in the low $40s,” Watkins said.

Last Monday, Anadarko Petroleum Corp posted a larger-than-expected quarterly loss and said it would cut its 2017 capital budget by $300 million because of depressed oil prices, the first major U.S. oil producer to do so.

Earlier, Halliburton’s executive chairman said growth in North America’s rig count was “showing signs of plateauing.

“In the US, investors have been waiting to see where that top is in oil production.” “We’ve hit a tension point,” Watkins added.

At a meeting of the Organiation of the Petroleum Exporting Countries (OPEC) and non-OPEC producers last Monday in St. Petersburg, Russia, Saudi Arabian Energy Minister, Khalid al-Falih, said his country would limit crude oil exports to 6.6 million bpd in August, down almost 1 million bpd from a year earlier.

Nigeria agreed to join the deal boy capping or cutting its output from 1.8 million bpd once it stabilises at that level.

OPEC said stocks held by industrial nations had fallen by 90 million barrels in the first six months of the year but were still 250 million barrels above the five-year average, which is the target level for OPEC and non-OPEC members.

The Joint OPEC and Non-OPEC Ministerial Monitoring Committee (JMMC) had at its fourth meeting in Russia, last Monday approved the decision of the federal government to cap Nigeria’s oil production at a sustainable volume of 1.8 million barrels per day (mbpd).

The meeting reviewed the June 2017 report, and also listened to the presentations made by the representatives of Libya and Nigeria on their production recovery plans, prospects and challenges.

OPEC and non-OPEC producers led by Russia had agreed to cut oil output by a combined 1.8 million barrels per day from January 2017 until the end of March 2018.

However, Libya and Nigeria were exempt from the production cap to help their production to recover from destructions caused by internal strife.

But in a communiqué issued at the end of last Monday’s meeting, hosted by the Russian Federation, the JMMC said it welcomed the flexibility of Nigeria in this regard, “which despite its commitment to recover its pre-crisis production level, voluntarily agreed to implement similar OPEC production adjustments as soon as its recovery reaches a sustainable production volume of 1.8 million barrels per day.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site

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Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site

Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.

Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.

A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.

One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.

However, Saudi authorities are yet to confirm or respond to the story.

 

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Brent Crude Oil Approaches $70 Per Barrel on Friday

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Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension

Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.

Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.

Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.

While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.

According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.

“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”

Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.

The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.

I do believe we’re headed for a much healthier supply and demand environment” she said.

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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