Oil prices sink as U.S. stock market slumps and dollar strengthens

Eileen GuzmanFeb 03, 2018

The investment bank said it believed the oil market was now more balanced after the United States shale rush of 2014-16 oversupplied the market and saw crude prices drop below $30 a barrel in January 2016.

"The OPEC/non-OPEC production and US tight oil have justifiably been a focus this year".

"There was a time when the US was disconnected from the global market", said Greg Sharenow, portfolio manager at PIMCO, who co-manages more than $15 billion in commodity assets.

It's the simple mathematics of compound growth that is propelling USA energy production past its former competitors.

Libyan crude exports peaked in October, before geopolitical tension in the region scuppered production once more.

American oil production has officially hit the 10 million barrel a day level and is expected to grow. That compares to just 590,000 bpd in 2016.

Indeed, the USA producers' resilience threaten to disrupt OPEC and Russian machinations to control global oil markets.

America's oil renaissance also has huge implications for Canadian oil producers and the wider economy, which has manifested itself in many direct and indirect ways.

Brent has held around these levels since mid-January, after being driven higher by shrinking US stockpiles and a weaker dollar earlier in the year.

London Intercontinental Exchange (ICE) is a London-based options exchange and a leading operator of global exchanges founded in 1982.

Giovanni Staunovo, a commodity analyst for UBS, told UPI the record-breaking output from the United States would normally send oil prices into negative territory. WTI prices were about $60 a barrel in January 2018. Brent crude futures and options alone contributed almost $300 million to ICE's revenues in 2016.

The US Energy Information Administration issued figures this week, slightly below records set back in November 1970, looking to overtake Russian Federation and Saudi Arabia as major producers. Chief Executive Officer Nizar Al-Adsani said this week. Therefore, investors will be watching today's U.S. Non-Farm Payrolls report very closely.

Crude's Thursday rebound from Wednesday's mild losses - which fueled experts' contention that a price correction is forthcoming - has been accompanied by a major bank declaring that far from heading for a downswing, oil will soon surpass $80 per barrel in a market that is already balanced. At the moment the new measures officially sanction 6 vessels, nine entities (oil, ship-ping, and trading companies) and 16 other businessmen and public officials.

As a result of efficiencies in operations, Shell is now making as much money with oil at an average of US$54 a barrel as it did when the price was around US$100 a barrel.

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