International Brent crude futures were yet to trade after closing 5 percent lower at $53.11 a barrel. The volatility could create a sense of panic and prompt even more speculators rush to liquidate their long positions, according to The Street. Recently, Saudi Arabia’s oil minister Khalid al-Falih added to that skepticism by saying, “History has demonstrated that intervention in response to structural shifts is largely ineffective, and I believe we in the organization have learned that lesson”.
Global oil benchmark, Brent crude, extended its declines on Thursday, hitting its lowest level since December, as the United States’ crude inventories surged to a new record high.
The OPEC countries were successful in cutting production by more than 1.5 million bpd against the pledged reduction of 1.8 million bpd.
“Our view is the oil price is in a trading range”. The IEA also said that global demand is increasing at a strong rate and USA shale output alone will not satisfy the thirsty global economy’s needs.
Oil prices were little changed for a third session on Tuesday, with investors searching for direction as concerns over rising U.S. shale output offset production cuts by OPEC and non-OPEC members. While US shale production has rebounded, larger-than-expected cuts elsewhere and signs of growing demand suggest stockpiles will decline, according to Goldman Sachs Group Inc.
The optimism stands in stark contrast with the fears that rippled through the US oil industry in late 2014. Not only have US crude stockpiles risen to record highs, but American shale producers could deepen the glut as they’re in the midst of a stronger revival than previously thought.
This compares to China’s three barrels per capita per year today, a figure expected to be 2.
The Organisation of the Petroleum Exporting Countries (Opec) is moving to bring U.S. shale producers and hedge funds into widening talks about how best to tame a global oil glut.
Total output reductions have exceeded 1.5 million barrels per day, Saudi Energy Minister Khalid al-Falih said on Tuesday, out of the nearly 1.8 million bpd pledged.
As a result of rising U.S. oil production, the OPEC is losing market share. USA oil producers have lifted output on the back of stronger oil prices following the decision by OPEC and other producers to cut output.
The long-term bullish trends would technically end if and when oil prices create significant lower lows.
Increasing rig efficiency also helped U.S. oil companies produce more crude oil with fewer rigs.
On the flipside, a possible extension of the deal – assuming compliance is high and cheating is low – would give more confidence to the US drillers to increase output at higher oil prices.