Expected surge in US shale depresses oil prices

Iran says supports extending oil output cuts

The expansion in USA drilling is damping optimism that had lifted prices above $53 a barrel after some members of the Organization of Petroleum Exporting Countries expressed support for prolonging production cuts with other nations beyond June. Brent was down 28 cents, trading at $55.08 a barrel by 3:24 p.m. EDT.

Hedge funds boosted bets on higher WTI crude prices a second week as futures topped $53 a barrel for the first time in a month, U.S. Commodity Futures Trading Commission data show.

Benchmark Brent crude futures were down four U.S. cents at $55,32 at 6.49am GMT.

Crude traders and investors in Asia also had their first chance to assess a 13th consecutive increase in the rig count by drillers of US shale oil. The Opec and IEA monthly reports broadly provided a mixed picture but both emphasized better compliance to output cuts in March which is price supportive.

Some of the recent attempts at valuing Aramco have placed the company's total worth at somewhere between US$400 billion and US$1 trillion, according to various assumptions about the tax rate, the cost of capital, ability to generate cash flow, oil price projections, and potential political sensitivity for future investors.

Including Nigeria and Libya, the two members exempt from the deal to cut supply, output by all 13 OPEC members in March fell to 31.939 million bpd, two sources said. For example, following the market crash of 2008, oil producers reacted to rapidly increasing prices that by increasing drilling activity and production.

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US drillers last week added rigs for a 13th straight week, bringing it to its highest in roughly two years. Oil is losing momentum after the longest weekly rally in two months, with confidence that United States crude stockpiles are beginning to shrink damped by concern that American drilling activity is increasing.

Four months into the agreement, OPEC said its latest production fell by 153,000 barrels a day to average 31.93 million barrels a day.

Oil producers are showing "very good" compliance with pledged production cuts, Saudi Energy Minister Khalid Al-Falih said Monday in Riyadh.

In December 2016, OPEC and non-OPEC producers reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices.

So of course, while tensions in the Middle East or (heaven forbid) the Korean peninsula would clearly be reflected in near-term oil prices, the main driver that will be a consistent factor over time is the level of global demand. "The amount of crude not being processed at the Riyadh refinery is reflected in the oil stockpiles in February as they increased from January".

Inventory reports from the American Petroleum Institute and Energy Information Administration due this week could determine where WTI crude oil would head next, as a larger than expected buildup would renew oversupply concerns and weigh on prices while a reduction or smaller than expected buildup could put some upside pressure.

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