United States oil prices rise supported by OPEC output cut compliance

Recent strength in global crude prices will see United States shale oil production lift in the second half of 2017, and the average price this year come in below the levels seen in January and February.

Brent crude oil prices were trading at $76.2 per barrel in January 2010. Brent futures fell 1.7% to $52.19.

From a figure of 19.9 million barrels in 2015.

Speaking at CERAWeek, a major industry event in Houston, Texas organised by IHS Markit, Bob Dudley, chief executive officer of BP, said: “We’ll plan the next five years with a $55-60 oil price”. Barkindo said OPEC was intensifying its monitoring of commercial stocks, but declined to offer specifics on where that level would be in order for the deal to be extended.

The kingdom had cut beyond the level pledged in the agreement and brought its output below 10 million bpd, Saudi Energy Minister Khalid al-Falih said on Tuesday.

He said Saudi Arabia does not want Opec to intervene in the oil market to address long-term structural shifts, but would support measures to address “short-term aberrations”. Occidental edged up 0.7%.

Also pressuring oil prices were expectations of a USA interest rate hike next week, which lifted the dollar against a basket of currencies, making greenback-denominated oil more expensive for holders of other currencies.

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 USA commercial stockpile grew by 8.2 million barrels. Last week, US output hit 9.09 million barrels, the highest in a year and a half.

Unlike the OPEC and non-OPEC state-run producers that have agreed to curb output, there is no mechanism for US independent producers and global oil majors to restrain output.

Last month, OPEC Secretary General Mohammad Barkindo said he wants compliance on the output deal to rise past 90% to almost 100%.

Saudi Arabia has reduced its own output to less than 10m barrels a day. The cartel and non-OPEC Russia have said that a possible extension is still too early to assess-a fact that will not keep them from talking up oil prices with hints and comments in the coming weeks and months.

The monitoring group was slated to meet in Kuwait at the end of March to further discuss whether OPEC members, along with Russia, Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan, were following the rules.