nsucurrent.com March 20, 2018

Oil falls as USA drilling undermines drive to tighten markets

30 May 2017, 06:21 | Ruby West

Oil falls as USA drilling undermines drive to tighten markets

Oil falls as USA drilling undermines drive to tighten markets

As a persistent increase in US drilling has undermined an OPEC-led push to tighten up the supply, prices of oil dipped on Monday.

Last week, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day.

There were expectations that U.S. oil output would continue to increase over the medium term which would undermine OPEC attempts to lower global inventories.

At the Multi Commodity Exchange, crude oil for delivery in July contract was trading higher by Rs 41 or 1.28 per cent at Rs 3,245 per barrel in a business turnover of 4,869 lots.

Brent crude futures LCOc1 were at $51.26 per barrel at 0500 GMT, down 20 cents, or 0.4 percent, from their last close.

Trading activity will be subdued on Monday due to public holidays in China, the United States and Britain. The contract ended the previous week down almost 3%.

Commerzbank analyst Carsten Fritsch called Monday's price moves little more than "intraday noise".

An initial agreement, in place since January, would have expired in June 2017.

The dire message was delivered by the Financial Post, which portrayed OPEC as "cutting itself into irrelevance" while USA and Canadian rig counts steadily increase (by 116 percent over the past year in the case of the latter, according to Baker Hughes data), inventories remain robust, and prices remain roughly where they were eight months ago.

Meanwhile, U.S. inventories dropped seven weeks in a row, though they still remain above the five-year average and production rose to the highest since August 2015. United States production has soared 10% since mid-2016 to more than 9.3-million barrels a day, close to top producer levels Russian Federation and Saudi Arabia.

The Post concludes that while the Saudis' earlier gambit to increase production and quash USA shale growth "was a risky, hard gamble, not for the feint of heart, and victory was far from assured, but today OPEC looks like it's playing to neither win nor lose". "We now have three weeks of combined inventories draw in crude, distillates, and gasoline so fundamentals speak of faster rebalancing in the market", Both Bryan Goh and Wood Mackenzie believes that the price of oil will revamp on the latter part of the year.

Analysts say that key to reining in ongoing oversupply will be to reduce bloated global fuel inventories.

Other News

Trending Now

Hassan Rouhani wins Iran President election for the second time
Iran's President Hassan Rouhani has been re-elected yet again as per the announcement made by the state television. Considered a moderate, many Iranians hope Rouhani will introduce reforms and improve relations internationally.

Comicon suspect threatened performer
Phoenix Police Department said the threats indicated he allegedly meant to target a Phoenix Comicon performer and police officers. The man was wearing all black at the time of the incident but police couldn't determine if he was dressed in a costume.

Estimated 23 mln would lose health insurance under Republican bill -CBO
In the states that don't request waivers, average premiums would be about 4% lower than under Obamacare. The legislation is also expected to increase insurance premiums by 20% in 2018 and 5% in 2019.

Elvis Presley's old private jet going under the hammer
However, the owner has allowed the plane to be shown at various aviation events. Elvis also owned more well-known planes.

Federal bank maintains rate hike amid economic slowdown, rise in inflation
The US central bank now holds around $4.5 trillion in securities, mostly in US Treasury bonds and mortgage-backed securities. Fed officials, however, made clear their baseline expectation was for a return to stronger economic growth.

Schapelle Corby joins instagram, heading to 100k followers in under…
And, finding her voice for the first time, Corby broke her three-year public silence and created a brand new Instagram account . He said that when he asked Corby where she would fly tomorrow, she said: "Can go to Perth, can go to Brisbane , or wherever".

LeBron James breaks Michael Jordan's playoff scoring record
James also gave his thoughts on the finals and said, " Once we get to the preparation for that juggernaut, we will be locked in ". Boston had another nice balanced attack on offense, with Avery Bradley putting up 19 points to lead the team.

Tornado watch for Tift County, south/southwest Georgia
The band of thunderstorms over north Florida prompted several severe thunderstorm and tornado warnings Wednesday morning. The forecast says some of the storms will likely become severe, especially during the afternoon and into the evening.

Cavs beat Celtics to earn NBA Finals rematch with Warriors
They have earned a rubber match with the Warriors, setting up one of the most anticipated NBA Finals in recent memory. Irving, who shook off a Game 4 twisted ankle, was 9 of 15 from the floor and 4 of 8 from 3-point range.

Billboard Music Awards: Céline Dion gives 'Titanic' performance
Celine Dion performed her classic My Heart Will Go On , at the Billboard Music Awards 20 years after the song was a chart topper. Though " My Heart Will Go On " became a resounding success, that doesn't mean it is - or was - universally beloved.