Will shale oil replace OPEC and non-OPEC production cuts?
21 Apr 2017 07:50 GMT
|By A/S Global Risk Management.|
| By Michael Poulson, A/S Global Risk Management|
Oil price saw some intraday volatility yesterday as markets weigh mixed news.
A major issue in the oil market right now seems to be if increased U.S. shale production will replace the production cuts made by OPEC and a row of non-OPEC oil producers over the last three months. Mixed news on the topic continues to spur volatility and tonight, the weekly oil rig count from Baker Hughes will be another indicator to watch closely. The number of active drilling rigs in the U.S. has increased for a couple of months and is currently around 2-year-high and crude oil inventories are swelling.
Markets are also closely listening to comments from OPEC regarding a potential extension of the 6-month oil production cut agreement between OPEC and non-OPEC oil producers. The parties are due to meet in the end of May, but Saudi Arabia - OPEC's largest oil producer - yesterday suggested that negotiations are already taking place between the parties. Six Arab Gulf oil ministers met to discuss the oil glut situation. Both Kuwait and Saudi Arabia seem to favour an extension of the deal and Saudi Energy Minister stated that: "there is consensus building but it's not done yet".
Turning to economic data front, U.S. home sales, U.S. and EU manufacturing and services PMIs are coming up today. Over the weekend, first round of the French Presidential Election takes place.
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