Oil prices fall on trade war fears, inventory gains

Danny Woods
Марта 9, 2018

Also, a source close to the talks reported that over 50 companies will take part in the meeting of the Organization of the Petroleum Exporting Countries with the U.S. shale oil producers. "We are going to see a major second wave of USA shale production coming".

The new wave is underpinned by higher oil prices following the pact between OPEC producers and a group of non-OPEC countries to collectively curb output through this year.

Yet overall US output this year will average 10.7 million barrels a day, breaking the 1970 record of 9.6 million barrels a day, according to EIA's monthly Short-Term Energy Outlook.

The bottom line is that Russian Federation and the OPEC actually helped the American shale oil industry to rise again, thereby creating a serious rival.

A 25% increase in the cost of imported line pipe, fittings and valves would raise the cost of a 280-mile oil pipeline-typical of those needed to carry shale oil from the Permian Basin to the Gulf coast-by $76 million. The U.S. also continues to mull additional sanctions against Venezuela, including oil trade related restrictions, to pressure Caracas to restore democratic processes inside its borders. Gary does not own the USO or OIL ETFs.

Historically, during many past oil disruptions, OPEC's Arab members like Saudi Arabia and Kuwait have increased exports to prevent oil prices from skyrocketing.

From a near-to-medium term perspective, Brent crude oil prices look to remain supported on positive demand outlook and output restraints from the Opec and non-Opec members led by Russian Federation. It'll probably consume most of the incremental demand. It's too early for OPEC to discuss extending production cuts into 2019, OPEC Secretary-General Mohammad Barkindo said in Houston. "It's irrational exuberance in the US, and it's irrational fear in the rest of the world".

"A large group of chemicals derived from oil and natural gas are crucial to the manufacture of many products that satisfy this rising demand", it added.

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All this leaves OPEC (and its partnership with Russia) in a quandary. This would steal market share from OPEC producers and would move the country closer to self-sufficiently. But in the age of US oil abundance, OPEC's Gulf members are questioning whether this approach continues to make sense.

"There is no doubt that financial markets have impact on oil". All comments are subject to editorial review. This is because growth from shale fields more than counters declines in conventional supplies. Rising oil prices are also encouraging shale companies to ramp up drilling.

While Calgary-based producers worry about a lack on investment in Western Canada, they are not alone.

It's now clear that shale barons are fine with remaining free riders as Opec seeks to instil market discipline.

World oil indexes started this week with a slight upward movement supported by news that Libya's largest oil field was temporarily idled, as well as forecasts that USA crude inventories may have posted a surprise decline last week.

It is in this context of confusion that the United States needs to consider the dangers of altering a suite of energy policies that are working.

Futures in NY fell from the settlement Tuesday after the American Petroleum Institute was said to have reported crude inventories mounted higher by 5.66 million barrels last week.

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