USA oil production could reach record high in 2017, say Rystad
- Author: Zachary Reyes Jun 02, 2017,
Jun 02, 2017, 19:37
"A scenario that would not be favorable to oil prices".
For more bearish drivers, read Crude Oil Prices Fell and Dragged S&P 500 Down. Prices of near-term contracts for benchmark Brent crude futures should rise near $60 around year's end, according to Citigroup's Christopher Main.
Oil prices fell more than one per cent on Tuesday amid signs of a resurgence in Libya's output and on concerns that extended production cuts by the world's top exporters may not be enough to drain a global glut that has depressed prices for nearly three years.
OPEC and other producers, including Russian Federation, agreed last week to extend a deal to cut production by about 1.8 million barrels per day (bpd) until the end of March 2018.
Higher supply from Nigeria and Libya, OPEC members that are exempt from the production-cutting deal, offset improved compliance by others.
The Organization of Petroleum Exporting Countries' output in May jumped 315,000 barrels a day from a month earlier to 32.21 million, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Daily oil production in Wyoming surged 8.5 percent to 203,000 barrels, and it increased in Oklahoma by 2.4 percent to 425,000 barrels. Gasoline stockpiles fell by 1.73 million barrels, whereas, distillate inventory rose by 0.12 million barrels. "I don't think this is going to be the end of it, I see the draws increasing from here", said Scott Shelton, energy specialist at ICAP in Durham, N.C.
"We call USA production the anti-fragile: Something that once shocked comes back stronger and more efficient than ever", said Michael Tran, director of energy strategy at RBC Capital Markets.
President Trump also questioned why the USA should kick in 3 billion dollars to support countries that will be allowed to increase carbon emissions while the US can not.
Russia, which has cut production by 300,000 bpd under the deal, could increase production next year to as much as 11.07 million bpd, the country's deputy energy minister told Reuters. The United States is not participating in the self-imposed production cuts.
BlackRock global chief investment strategist Richard Turnhill expects oil prices to remain "range-bound" until supply reductions are confirmed. Distillate production averaged over 5.2 million barrels a day last week, up slightly compared with the prior week's production.
OPEC's extended oil supply deal faces a litmus test in the next couple of months while summer demand kicks in, as wary oil traders and investors will need evidence, rather than reassurance, that rebalancing is underway.
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