U.S. oil output is booming and seen outpacing Saudis, Russia

Saudi Arabia wants to extend non Opec cooperation

U.S. oil output is booming and seen outpacing Saudis, Russia

If oil prices fall, markets panic, and OPEC sweats.

The global oil market is moving closer to reaching "a healthy balance between supply and demand", the IEA said, with "no clear sign yet of OPEC turning up the taps to cool down oil's rally".

What seems to be happening now is that oil prices are at a three year high but rising at speeds that no one anticipated.

OPEC and Russian officials are set to meet in Oman on Sunday for a joint ministerial monitoring committee to verify how closely countries are adhering to the agreed production cut of 1.8 million bpd. U.S. oil production is already expected to rise to ten million barrels a day "as soon as next month", notes Bloomberg.

In December 2016 was a meeting of oil producers outside the OPEC. The fact that the EIA's models failed to capture the dramatic rise in production enabled by fracking and other technological advances illustrates just how fundamentally those advances shifted the market.

It will take sustained high prices, not price spikes, to see further activity drift back into the market, Nieboer said.

Are you wondering why oil is off to such a rousing start in 2018?

Analysts also pointed to excessive long positions in financial oil markets as a likely brake on any upward momentum in prices, with many traders soon likely to cash in on recent price rises, which have seen crude jump by around 14 percent since early December.

Besides slowing demand, a spectacular rise in USA output is expected to keep oil prices under pressure, the IEA said. Even now, I've seen estimates that only about 60 percent of oil in most reservoirs can be extracted with today's technology regardless of oil prices, economics, and how much is spent. Money managers raised their net long U.S. crude futures and options positions in NY and London by 40,855 contracts to 541,990 in the week to January 16, a record high, the U.S. Commodity Futures Trading Commission said.

Mumbai: Even as analysts and fund managers expect corporate earnings to recover later this year, rising crude oil prices could bite into the margins of some companies.

Oil prices ended down on Friday and broke a four-week winning streak after a rally that had taken benchmarks to three-year highs, as investors sold positions on re-emerging USA production concerns.

OPEC, for the second month in a row, adjusted its 2018 oil output forecast from non-OPEC members. "Demand is going to continue to surprise on the upside", he added.

But unlike voluntary cuts by Saudi Arabia, Russia and others meant to stoke higher crude prices by draining a global glut, Venezuela has been unable to stop a now six-year-long production decline.

"The production-reduction agreement will remain for a long time and there is no thinking right now to exit it", Rashidi told a news conference in Kuwait City with OPEC Secretary General Mohammad Barkindo.

OPEC estimated its crude supply at an average of 32.9m bbl/day in 2017, which it projects will increase slightly in 2018 to 33.1m bbl/day.

One of the key premises of the OPEC's production cut was to bring down the USA oil inventories back to its 5 year average in order to reduce the oversupply in the markets.

With plenty of surplus oil still around, ministers from the United Arab Emirates, Iraq and Kuwait insist there's no need to change strategy and the cartel will stick with its plan to restrain production for the rest of the year.

The world will be carefully monitoring US production, particularly OPEC, which cut back its production previous year and pledged to do the same in 2018 in a bid to wipe out the oil glut. As a result of new investments, the production in the U.S. could reach 11 million barrels per day during the year, surpassing Saudi and Russian yields, shows the official government forecasts.

Latest News