Political

U.S. Shale Growth Threatens OPEC Deal

U.S. Shale Growth Threatens OPEC Deal

Indications emerge at the global crude oil market on Monday that the recovery efforts induced by cut in production output by organisations of petroleum exporting countries (OPEC) and some non-OPEC producers is under threat.

This is even as oil price hovered around three-month lows on Monday, as rising inventories and drilling activity in the United States, the world’s top energy consumer, offset optimism over OPEC’s efforts to restrict crude output and reduce a global glut.

Experts have therefore stated that the rising U.S. oil output may hamper OPEC and non-OPEC producers from extending production cuts beyond June, hence it might lead to a new price war, Russia’s top oil major told Reuters on Monday.

U.S. shale oil production had been in retreat as oil prices tumbled from above $100 a barrel in 2014 to below $30 in 2015, making costly fracking processes less profitable.

Brent crude futures LCOc1 fell 7 cents to $51.30 a barrel having earlier hit a session low of $50.85, its lowest level since Nov. 30.

U.S. West Texas Intermediate crude (WTI) CLc1 fell 20 cents to $48.29 a barrel, a 0.4 percent loss.

However, Goldman Sachs said in a note to Reuters that it remained “very confident” about commodity prices and maintained its price forecast of $57.50 for WTI in the second quarter.

The slide could be the result of traders unwinding bullish long positions, and could slow as those positions are unwound, Tradition Energy’s McGillian said.

Source: Political

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