Published: Wed, May 30, 2018
Markets | By Josh Butler

OPEC Mulls Pumping 1m Barrels Of Oil Daily

OPEC Mulls Pumping 1m Barrels Of Oil Daily

The entire nation has been feeling the pinch but with the fuel prices no longer being regulated by the central government and the crude oil prices going up, the oil companies have their hands tied.

Since previous year, oil producing countries have cut back production in an attempt to offset dipping prices, withholding as much as 1.8 million barrels per day.

USA oil production has surged by more than 27% in the past two years to 10.73-million barrels a day. In our view, a significant fraction of the risks appear to be "priced in" and indeed some of these might abate over time.

The drop in oil prices is welcome news for drivers, as well as companies and countries that buy a lot of energy. The group's Joint Ministerial Monitoring Committee said Friday compliance was 152% for April.

Iran is another factor in the increase of oil price matrix.

Riyadh and Moscow are prepared to ease output cuts to calm consumer worries about supply adequacy, their energy ministers said on Friday, with Saudi Arabia's Khalid al-Falih adding that any such move would be gradual so as not to shock the market. Without compensating supply from other members, this number looks likely to expand as the USA reimposes sanctions on Iran and the collapse of Venezuela's oil industry worsens.

The simple reason for this is that the shale oil boom has left crude sloshing around the USA, resulting in a local oversupply.

"We had a surprise rise in the rig count after a period where there's been some speculation about bottlenecks in U.S. production limiting the prospect of further output increases", Pedersen said.

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Concerns that Saudi Arabia and Russian Federation could boost output have exerted downward pressures on oil prices, along with rising oil production in the United States.

The impact of United States sanctions on Iran has still not gone into effect. "We respect all the member countries".

Later in the week, the usual weekly report on USA crude oil stockpiles by the API and the EIA is due on Wednesday and Thursday, respectively. Domestic oil production is at an all-time high of 10.7 million bpd, not far from Russia's.

While issues related to refining and distribution of new shale supply could get resolved in the medium term with new investments in the sector, over the short term supply from the United States could be constrained.

Saudi Arabia and Russia's proposal to revive production signals supplies are now tight, and isn't a bearish development, Goldman analysts including Damien Courvalin wrote in a report.

There is therefore no doubt that Zimbabwe with a new administration working so hard to improve the country's economic fortunes, is being negatively impacted by this 50 percent price hike of oil in the past six months.

The US position - working the political mathFor the US, traditionally higher oil prices adversely affect growth.

OPEC kingpin Saudi Arabia is determined to keep oil prices trading around current levels, one strategist told CNBC Monday, but a total shutdown in Venezuelan production could soon prompt crude futures to skyrocket toward $100 a barrel. With the recent moderation in oil price the USD/INR pair has quite predictably seen some relief.

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