Why crude oil prices are on upward swing, by US energy agency
OPEC said USA shale producers lowered breakeven costs between 2015 and 2017 but now service companies are raising rig and labor costs so breakeven prices are rising.
NEW YORK, Jan 18 (Reuters) - Oil rebounded after slipping below $69 a barrel on Thursday, supported by a record drawdown of USA crude stockpiles at the Cushing, Oklahoma delivery hub, despite concerns that OPEC-led output cuts will increase supply from the United States.
US crude oil production is expected to reach 10 million barrels a day sometime next month, and rising well counts presage an even higher total if prices remain above $60 a barrel. Exports averaged 1.25 million barrels a day last week and have a cumulative daily average for the year of 1.16 million barrels a day, a 63% increase over the year-ago export total.
The IEA expects the U.S.to be capable of producing 30 million barrels of oil and gas a day by 2025, a 25% increase from the current levels.
"The "sell" side is assuming an average oil price of $55 per barrel for 2018".
These two realities, both undesirable, were presented for Venezuela in OPEC's latest monthly report, out Thursday. We expect bunker fuel prices may stay steady next week.
U.S. crude inventories fell 6.9 million barrels last week, compared with forecasts for a 3.5 million-barrel draw, the U.S. Energy Information Administration said.
However, the report also reiterates a truism of the free market in that declining production in other nations will do a lot to mitigate the excess output.
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Global headlines began screaming nearly immediately: The United States will overtake Saudi Arabia as the world's leading oil producer around 2017 and will become a net oil exporter by 2030.
Stocks in Russian energy companies have started the year with impressive growth thanks to increased prices for crude futures as well as the ruble exchange rate, which inevitably determine the sector's earnings.
But Rashidi believes that demand is still too high to suggest that more United States exports could hurt OPEC members' share of the market.
IEA analysts believe that steady OPEC production must be treated with caution.
"After years of oversupply, the inventories are contracting much faster than the markets had anticipated", said Stephen Innes, Head of trading for Asia/Pacific at futures brokerage Oanda in Singapore.
The upshot? Unless there is a serious supply disruption, $65 a barrel is a "natural ceiling" for the oil price, he reckons. With another 8 million barrels per day expected between 2010 and 2025, the International Energy Agency said the US oil patch was expanding at a historic pace.
Earlier, oil minister said the oil market was expected to re-balance towards the end of 2018 and any strategy to exit a deal on supply cuts between OPEC and non-OPEC oil producers would be gradual.
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