Oil prices mixed on rising production, OPEC cuts

The oil cartel is composed of sovereign nation members, but shale oil producers are American private companies, making it harder for OPEC to have intergovernmental contact with the US shale sector.

“Saudi Arabia led by example by lowering its production below 10 mbpd, from our maximum capacity of 12.5 mbpd”, Al-Falih said, speaking at the IHS CERAWeek 2017 energy conference in Houston, Texas.

“I’m most troubled by lagging progress of long-cycle development projects, which are needed to provide the “base load” of future global supplies”, he said.

“The mood will be different this year”.

That was the message of the International Energy Agency as the CERAWeek energy conference kicked off in Houston. Royal Dutch Shell (RDSA) was off 0.1%.

He also told CNBC, “It’s not a matter of whether the USA should or shouldn’t invest in its shale and contribute to the global market supply base: it’s the pace at which it can supply”.

Libyan woes added to a complicated narrative for the oil markets so far this year.

The U.S., however, is expected to be a bigger contributor to global supplies. “The total rig count now is 609”. Better prices could stir a new round of merger activity, according to some analysts. Al-Falih said he welcomes investment in US shale, “regardless of what you might hear elsewhere”, and sees its growth as a sign that the global industry is rebounding.

However, the American industry will have to balance its production surge with the need to keep prices at profitable levels.

USA 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.

Fund managers have doubled their net long positions in Brent, WTI and options to 951 million barrels between the start of November and February 21, betting OPEC’s output cuts would lift prices. The average Permian well now gushes 668 barrels per day, compared to just 98 barrels four years ago, according to government data.

“We expect a balanced oil market in 2017 for the first time in almost three years”, said Steve Pastor, president of BHP’s petroleum business.