-2.1 C
New York City
Tuesday, June 25, 2024
Home NEWS US Shale Oil Producers Drag Down Oil Prices

US Shale Oil Producers Drag Down Oil Prices

[dropcap]O[/dropcap]il prices rose on Monday but the gains were limited as investors gauged whether an increase in U.S. drilling rigs and record stockpiles would undermine efforts by producers to cut output and bring the market into balance.

Brent futures were up 17 cents at $55.98 a barrel at 0616 GMT, while U.S. West Texas Intermediate crude CLc1 was up 15 cents at $53.55. Both contracts earlier fell slightly in quiet trading.

“Sustained gains above $55 a barrel, and a hoped for rally to $60 a barrel, (are) both proving incredibly tough nuts to crack,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

“At the crux of the matter is that 90 percent OPEC compliance is being balanced by ever increasing U.S. shale production,” he added.

U.S. energy companies added oil rigs for a fifth consecutive week, Baker Hughes said on Friday, extending a nine-month recovery with producers encouraged by higher prices, which have traded mostly over $50 a barrel since late November.

“Assuming the US oil rig count stays at the current level, we estimate U.S. oil production would increase by 405,000 (barrels per day, or bpd) between 4Q17 and 4Q16 across the Permian, Eagle Ford, Bakken and Niobrara shale plays,” Goldman Sachs said in a research note.

Overall, 2017 U.S. production will rise by an average 130,000 bpd from a year ago, the note said.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, agreed last year to cut output almost 1.8 million barrels per day (bpd) during the first half of 2017.

Estimates indicate compliance with the cuts is at around 90 percent, while Reuters reported last week that OPEC could extend the pact or apply deeper cuts from July if global crude inventories fail to drop enough.

But rising U.S. output helped boost crude and gasoline inventories to record highs last week, amid faltering demand growth for the motor fuel.

 

Most Popular

Kia Adds Hybrid Powertrain to the Carnival MPV Lineup

Kia has updated the carnival with design language that combines bold exterior elements with a sleek, high-tech interior. The refreshed 2025 Carnival boasts a bolder...

Blaze at Lithium Battery Plant Kills 22 Workers

A lithium battery factory in South Korea was set on fire after multiple batteries exploded on Monday, killing 22 workers, most of them Chinese...

Toyota Racing Team Triumphs At Safari 1000

TOYOTA Racing South Africa (TGRSA) has delivered an outstanding performance at the TGRSA Safari 1000, the third round of the 2024 South African Rally-Raid...

Excitement Turbocharged, as Classic Car Show 2024 Holds at Nasrec on July 6 and 7

With less than two weeks to go for the 2024 edition of The Classic Car Show, excitement is building as the event at Nasrec Expo Centre...