Jueves, 23 Marcha, 2017

Saudi Arabia takes wait-and-see approach to U.S. oil

Tax Breaks Could Save U.S. Oil Industry Billions Tax Breaks Could Save U.S. Oil Industry Billions
Manuel Armenta | 21 Marcha, 2017, 02:10

The IEA said global inventories rose in January for the first time in six months despite OPEC output cuts, but said if it stuck to its production curbs, the market should see a deficit of 500,000 barrels per day (bpd) in the first half.

Oil prices slipped on Monday despite news that OPEC was supportive of extending a six-month deal to cut output as investors continue to grapple with worries about growing US oil output and high inventories.

Compared with past year, total non-OPEC supply was 285,000 bpd lower, of which the United States accounts for roughly half, the agency said.

While OPEC is cutting production through managed declines, the floor under crude oil prices boosted investor confidence in the USA shale oil sector, which has proven more resilient to lower crude oil prices than expected.

Official data showed crude inventories in the United States, the world's top oil consumer, fell last week as imports plunged, dropping after nine consecutive increases. The supply cuts triggered positive vibes for crude oil and investors were looking forward to booking gains once the output cuts restore a sense of balance to the market.

Oil found some support after Saudi Energy Minister Khalid al-Falih said on Thursday the cuts by OPEC and non-OPEC countries could be extended beyond June if stockpiles stayed above a long-term average.

U.S. crude inventories last week slid by 237,000 barrels to 528.2 million, according to the Energy Information Administration.

Hedge funds and other money managers cut their net long positions in US crude futures and options in the week to March 7, according to data from the US Commodity Futures Trading Commission (CFTC) on Friday.

Saudi Arabia has set a near-impossible target to end the current round of OPEC oil-production cuts, indicating that a policy rollover into the second half of the year is a near certainty. In his words, "my conversation with colleagues from OPEC and outside OPEC gives me a high degree of confidence that the impressive performance we have seen will improve".

That brought the total count to 631, the most since September 2015, underlining concerns that the ongoing rebound in USA shale production could derail efforts by other major producers to rebalance global oil supply and demand. However, U.S. shale producers can't continue to increase their output indefinitely. The opinions expressed are exclusively of the author.

Alex Mills is President of the Texas Alliance of Energy Producers.