Oil prices fall as USA stocks rise, output increase weighs

Howard TerryMar 09, 2018

OPEC representatives planned to meet Monday night with executives from some of the USA shale producers - a follow-up to an ice-breaking meeting on the sidelines of the same conference a year ago.

Oil rose in tandem with global equity markets, shrugging off concerns over a new wave of crude production from the U.S.as fears of a global trade war eased. What's more, the agency says that by 2023, the US will become by far the world's top producer of oil liquids. This is an average annual growth rate of about 1.2 million barrels per day, which does not indicate any particular change compared to last year's forecasts. This year, the United States could surpass Russian Federation as the world's largest oil producer.

OPEC cut output in 2017, effectively making way for shale. The cartel's leaders have even expressed interest in keeping some production curbs in place through 2019.

The report reads that over the period of September through November, American shale oil companies increased their production by 846K b/d.

In their efforts to limit production, OPEC and Russian Federation are trying to reduce global surpluses of oil. "It was Opec", he said at a recent industry conference in London.

"The oil industry has yet to recover from an unprecedented two-year drop in investment in 2015-2016, and the IEA sees little-to-no increase in upstream spending outside of the United States in 2017 and 2018".

The U.S. Energy Information Administration (EIA) on Tuesday released its Short-Term Energy Outlook (STEO) for March with the not completely stunning news that U.S. crude oil production averaged 10.3 million barrels of crude oil a day last month, up by 230,000 barrels from the January total. There will be strong global demand as well as increased cost due to steal tariffs. "We've found it, and will pump it".

In the same context, Moscow has made an announcement via the Deputy Energy Secretary Alexey Texler that it does not wish to become a member of the OPEC but seeks a special relationship of co-operation with the fourteen producer countries that make up the organisation. These contracts protect them should prices slip. "We must challenge mistaken assumptions about the speed with which alternatives will penetrate markets". With the number of rigs up nearly a third over the previous year, U.S. production has surged above 10-million barrels a day, surpassing the all-time high set in 1970. "With seaborne oil traveling longer distances, energy security, one of the IEA's core missions, will remain as critical as ever". Majors including BP Plc have forecast that gasoline use will decline as electric vehicle usage grows.

General Electric's Bake Hughes unit reported on Friday that the USA energy companies increased 1 oil rig in the week that ended in March 2. The IEA said this "will impact strongly on future oil demand".

Other oil-market news. Crude stockpiles in Cushing, Oklahoma probably slid for an 11th straight week to the lowest since 2014, according to a Bloomberg survey. In a sign of that convergence, the head of Alphabet Inc's Google Cloud division also will attend the conference.

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