Oil Falls After IEA Points to Rising US Production

USA oil companies could make “decent” returns at $53-a-barrel oil and could remain profitable at $60 a barrel even if oilfield service costs rise 15 percent this year, the Organization of Petroleum Exporting Countries said in its monthly oil-market report, citing research by JP Morgan Chase & Co.

Market tightening in the final months of 2017 was evident and continued into 2018. The United Arab Emirates was also present on Sunday as it holds the presidency of OPEC.

There are also indications that OPEC and non-OPEC members may be looking at an agreement beyond 2018 that may be in the form of a collective ceiling on production that would reflect more equity and be harder for countries like Kazakhstan to cheat, sources at the meeting in Oman told some reporters.

The militants agreed to a ceasefire in August 2016 – a development that helped pull Nigeria out of recession in the second quarter of previous year. American production is at its highest levels since the 1960s, the agency said.

It would send the message that “we are going to work together not only with the 24 countries, but inviting more and more participants”, he said.

In its monthly report the organisation said production growth in the USA was returning to the “heady days” of 2013-15, with total output on course to overtake Saudi Arabia and rival Russian Federation.

Bloomberg gadfly suspects the figure from Caracas was manipulated as a result of Major General Manuel Quevedo in November suddenly appointed both oil minister and head of state-oil company Petróleos de Venezuela SA: “new leaders inheriting bad situations have an incentive to kitchen-sink the figures in the hopes of gaining credit for subsequent stabilization”. Oman is in favor of a new type of deal, he said without elaborating.

On Tuesday, the IEA executive director, Dr. Fatih Birol testified before the Senate as he provided the global energy market outlook.

Meanwhile, unsold barrels of crudes from West Africa could put pressure on the premiums of Malaysian crude cargoes for March loading, traders said, according to Platts.

Meanwhile, BMO Capital said sentiment in global equity markets remains generally positive heading into the final session of the week as investors eye a potential US government shutdown amid a relatively light overseas economic calendar.

“We look at the balance of demand and supply in the first instance”, Novak said earlier this week.

At this rate of weekly growth, US drillers could hit the 10-million-bpd mark much sooner than expected unless they deliberately decide to rein in production to stop prices from falling. It can’t cover global demand growth all by itself.

The five-year average is around 420 million barrels, so stocks are now at a 3-year seasonal low. In fact, as per some reports, a number of shale producers have hedged more than 70 per cent of their production already.

Crude edged lower amid predictions of a steep hike in US crude output this year.

The agency said it was reasonable to assume that the decline will continue, but it was impossible to say at what rate.

Although the total volume is lower year-on-year, the share of refined products accounted for 19 percent of total exports in October, up from around 13 percent a year earlier.