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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Focus turning to US oil production

04 Dec 2017 07:24 GMT

By A/S Global Risk Management.



Brent oil price remains in the low/mid-sixties after last week's OPEC / non-OPEC meeting where the parties agreed to extend the current oil production cut agreement (due to expire in March 2018) till end of 2018, with a loophole to exit the deal should oil prices escalate and the market rebalance. Also, the two OPEC members currently exempt from the deal, Libya and Nigeria, agreed to keep oil production around current levels. Russia, the largest non-OPEC oil producer participating in the production cut deal, states that "...we believe that the third quarter (of 2018) could be the period when the market rebalances...." The overall target of the production cut deal is to bring back global oil inventories to 5-year average.

The weekly oil rig count from Baker Hughes on Friday showed an addition of active drilling rigs in the U.S. of two rigs last week to 749, the highest since September. According to the Energy Information Administration (EIA), the number of DUCs (drilled but uncompleted oil and gas wells) in the U.S. was 7,342 in November. As oil prices increase, so does the possibility of U.S. oil producers activating the idle wells - thus potentially limiting the effect of the OPEC/non-OPEC oil production cut.

Turning to economic data, the week starts off rather slowly, picking up data-wise as the week progresses with U.S. jobs reports (Wednesday and Friday) and Chinese trade activity possibly causing some intraday volatility in the financial markets which could spill over into the oil markets.

Turning to economic data, today sees a row of European and U.S. PMIs along with central bank speeches.



A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.


Image: Michael Poulson, Oil Risk Manager at A/S Global Risk Management. Image credit: A/S Global Risk Management




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