Oil prices entrenched in tight range; eyes on data

He added: “I am optimistic about the global market outlook in the weeks and months ahead – though I caution that my optimism should not tip investors into irrational exuberance’ or wishful thinking that Opec or the kingdom will underwrite the investments of others at our own expense”.

IBD’S TAKE: U.S. shale producers have ramped up spending and rig counts as oil prices rise and OPEC curbs production.

The Organization of the Petroleum Exporting Countries (OPEC) agreed to cut its output by about 1.2 million bpd from January 1 to prop up oil prices and reduce a supply glut.

Oil futures were marginally up on Tuesday (7 March) but stayed within recent range, as the chief executive officers of BP and ConocoPhillips said the oil industry was mentally prepared for a $50-60 oil price.

Other factors pressuring prices is the strengthening USA dollar and rise in US inventories.

“We discussed the market and the need for compliance from non-OPEC and OPEC”. “The UAE’s output stands out”, one Paris-based commodities analyst who spoke on condition of anonymity said.

A spokesman for Conoco declined to comment on the meeting. Commercial interests represent the hedging by oil companies and others in the industry. And on Tuesday, Saudi Energy Minister Khalid Al-Falih appeared to lay out an initial, albeit tough, negotiating position.

The meeting came after OPEC Secretary-General Mohammed Barkindo met hedge funds and shale producers in Houston earlier in the week, seeking to widen talks on how to tame the global glut.

The price decline came a day after the Energy Department reported a surge of crude in the nation’s oil storage tanks in the last week, when the US commercial stockpile grew by 8.2 million barrels.

“We expect USA crude production’s upward trend to continue throughout 2017 due to the rise in rig activity, increased capex budgets, and the roughly two to four-month lag between spudding shale wells and production”.

US shale oil production may grow by 1.4 million barrels per day by 2022 with prices at about $60 per barrel, the IEA said in a report. The price continued to fall on Thursday.

The build in supply comes in the turnaround season for refiners, when they normally use less crude and some analysts had been expecting a dip in prices, especially with large USA gasoline supplies.

OPEC plans to meet on May 25 in Austria to decide whether to extend or deepen the supply cuts.

Oil prices ended little changed on Tuesday, as growing US production expectations offset earlier gains after Saudi Arabia’s oil minister said market fundamentals were improving.

Despite record exports in US crude oil, inventories have ballooned to a new high week after week, threatening a speedy rebalancing of the market.