Oil prices plummet amidst increasing USA drilling activity and steady OPEC supply

Oil prices fell more than one per cent yesterday as investors made record cuts to bet on rising prices after strong drilling data from the United States fed concerns about the effectiveness of production cuts led by Organisation of the Petroleum Exporting Countries (Opec) to curb a supply glut, Reuters reported.

So far the cutback has not had the desired effect, as the USA has stepped up to bridge the gap, which resulted in decline of oil prices by more than 10% in the initial month of the year.

The IEA said crude stocks in the world's richest nations rose in January for the first time since July by 48 million barrels to 3.03 billion barrels.

"This unwinding of position is both a cause and reflection of the big fall in crude oil prices when the cracks in the Opec/non-Opec deal emerged and when it seems like it became evident shale oil is back and the new swing player", said Greg McKenna, chief market strategist at brokerage AxiTrader. Non-OPEC countries also agreed to cut production by 0.6 million barrels per day.

How Trump, Ryan are recruiting on health care bill
Republicans leaders want to push their bill repealing and replacing much of the 2010 health care law through Congress by April. And he said he's not against keeping Medicaid expansion, but cautions that would mean increasing state taxes to pay for it.

The price of Brent crude is now trading at $51.92 while West Texas Intermediate (WTI) is at $48.45 a barrel with analysts suggesting oil prices could face further pressure if managers decide to sell off the remaining net-long positions totalling 820 million barrels, according to the FT. Declining production in the Midwest, expansions in pipeline capacity, and more attractive imports due to narrowing crude oil price spreads all contributed to reducing movements of crude by rail. This is the highest level since September, 2015. "The seven major oil and gas basins in the country would have an output of more than almost five million barrels a day collectively", it said.

Despite increasing crude oil prices throughout most of 2016, total US crude oil production in 2016 was below its 2015 level. The gave rise to hopes that the oil price war started by Saudi Arabia more than two years ago may finally be coming to an end.

In 2016, the first full year with no restrictions on exports of domestically produced crude oil, USA crude oil exports averaged 520,000 b/d, 55,000 b/d (12%) higher than in 2015.

"With the Baker Hughes rig count rising for a ninth straight week, investors will be hoping that Opec this week will reiterate commitment to production cuts, perhaps going so far as to begin talking up chances of further cuts in June". But shale oil companies' cost-cutting efforts of the past few years virtually ensure that we won't see a return to $100-per-barrel oil in the next few years.

Recommended News

  • Neymar Could Leave Barcelona To Play for A Premier League Club

    Neymar Could Leave Barcelona To Play for A Premier League Club

    Neymar admitted that he is amazed by the Premier League and also confessed his love for the playing style and the teams involved. The Barcelona star used Leicester as a prime example and says they must be respected going forward in the Premier League.
    ACC proves it's overrated with embarrassing NCAA tournament showing

    ACC proves it's overrated with embarrassing NCAA tournament showing

    But it's the bottom half of the bracket commanding the most attention with 7-seed MI , possibly the hottest team in the field. In that spirit, we've got the tip times and TV schedule for all of the Sweet 16 games upcoming on Thursday and Friday.
    Schulz confirmed SPD chief to challenge Merkel in elections

    Schulz confirmed SPD chief to challenge Merkel in elections

    Schulz and Merkel's parties are now in a coalition government in the state, as they are at the national level. In a nod to critics on the left, Schulz is proposing to expand benefits for jobless who agree to retraining.
  • Brad Underwood's deal with IL  worth $18 million

    Brad Underwood's deal with IL worth $18 million

    However, during my time at Western Illinois, I always saw the Illinois coaching job as one of the truly best in the nation. He accepted the IL job on Saturday, the day after Oklahoma State was eliminated from the first round by MI . "I was there.

    'Sesame Street' Adds A Muppet With Autism To Its Roster

    She has already appeared in Sesame Street cartoons and books, but this will be her first appearance on the famous children's show. Another challenge for TV and movie creators is understanding the broad spectrum of severity within an autism diagnosis.

    John Elway backs Gorsuch for Supreme Court

    It usually either recommends a nominee favorably or unfavorably before sending the final vote to the full Senate. But Republicans have their own plan to deal with a potential filibuster: Going nuclear.
  • Forbes unveils 31st annual list of world's richest billionaires

    Forbes unveils 31st annual list of world's richest billionaires

    Chaudhari, who made his debut in the Forbes billionaire list in 2013, saw his fortune increase by US$ 210 million a year ago . The richest person with a tech fortune - who's also the richest person in the world-is Microsoft cofounder Bill Gates.

    Ronald Koeman keeps his cool as Everton records loom

    Everton are planning a £50million double transfer swoop as they plan for life without Romelu Lukaku. But it gave us more space to kill the game and we did that.

    Did Trump golf this weekend? The White House won't say

    Trump has reportedly been on the grounds of his golf courses 11 times since becoming President, and that's as of March 19. Trump, Rory McIlroy , former baseball star Paul O'Neill and Clear Sports CEO Garry Singer on the links February 19.
  • Spicer Pressed on Why Trump's Golf Trips Are Different Than Obama's

    Trump said while campaigning for president that if he won, he would probably be too busy doing the people's business to golf. The White House said Trump had "meetings and phone calls" at the club and wouldn't say whether he was golfing.

    Former Female Student Making Allegations Against Gorsuch Has Ties to Obama, Democrats

    For months previous year , Republicans refused to consider then Democratic President Barack Obama's pick to fill the seat. He contends that's important for Arizona where more than 81 percent of the land is controlled by the federal government.

    Trump and his team don't want to talk about his golf game

    According to estimates, his visits to Florida cost taxpayers several million dollars per weekend. Trump appears to have played golf 10 times since taking office, a rate of once every six days.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.