OPEC's success may be its own undoing, as oil market may overtighten

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That may signal a further increase in US crude output, which jumped to 9.92 million barrels a day in the seven days to January 26, the highest level since the early 1970s and close to the output of top producers Russian Federation and Saudi Arabia.

The Price of oil kept stable today due to the compliance with the OPEC and other big exporters agreement to eliminate excessive offer in the market and thus stabilize quotations.

OPEC remains concerned about the level of production by USA shale producers and the cartel is urging its US rivals to pare output to support prices.

"U.S. oil production surged above 10 million barrels a day for the first time in four decades, another marker of a profound shift in global crude markets", reports Bloomberg.

The U.S. exported an average of 1.7 million barrels per day in October, a monthly record high, and more than twice as high as August levels.

Inventories are reported with a two-month lag, so by the time they have reached the five-year average, OPEC may be late to react.

Blending more US oil at the terminals may help offset the loss of some Venezuelan supply and the emptying of tanks by companies that had stored crude past year to sell later at a higher price.


Even so, adherence by producers included in the deal to curb supply rose to 138 percent from 137 percent in December, the survey found, suggesting commitment is not wavering even as oil prices hit their highest level since 2014.

Goldman's bullish outlook is driven by its revised demand forecasts, reflecting stronger economic growth in emerging markets.

Ongoing optimism that OPEC-led output cuts would also continue supports oil indexes.

Back in 2008 when prices almost touched $150 a barrel, analysts Arjun Murti, Kevin Koh and Michele della Vigna predicted crude prices could surge as high as $200 a barrel if a major disruption were to affect supply.

A weaker Dollar will also help to increase demand for US crude oil. In September and October, exports to Europe averaged 510,000 b/d, which accounted for 31% of US exports of crude oil. My prediction is, the bull run in crude oil is not over and the price could reach $70 a barrel soon. A bearish report will likely drive the dollar through three-year lows.

"American crude oil is a game-changer in worldwide trade, global politics and domestic energy security", Todd Staples, president of the Texas Oil and Gas Association, said in a statement after the federal numbers were made public.

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