Oil prices dips as U.S. rigs count increases

Lucy Hill
March 14, 2017

The slump in prices has occurred as more rigs are deployed to look for oil in the United States and as crude inventories in the U.S., the world's biggest oil consumer, have surged to a record. "However, the key to market performance this week is the response to the US lift in rates".

On the flipside, a possible extension of the deal - assuming compliance is high and cheating is low - would give more confidence to the USA drillers to increase output at higher oil prices. USA crude stockpiles have climbed to a record and production surged to the highest in more than a year, while Saudi Arabia's Oil Minister Khalid Al-Falih said global supplies are falling slower than expected.

U.S. drillers boosted the rig count by eight to 617 last week, according to data Friday from Baker Hughes. The contract lost $2.86, or 5.4 percent, to $50.28 on Wednesday, the biggest decline in percentage terms since February 2016.

The Organization of the Petroleum Exporting Countries (OPEC) and shale producers have fought each other to a draw over the last two years, with neither able to achieve a decisive victory.

"There are significant risks the (OPEC-led) deal won't be extended partially because of the main participants, but also because of the output dynamics in the United States, which will not want to join any deals in the foreseeable future".

A Reddit user predicted the Browns' Brock Osweiler trade 18 days ago
It's a shrewd trade for a Browns team that is rebuilding and has more cap space than it can realistically use this offseason. The Cleveland Browns released quarterback Robert Griffin III after one injury-marred season, the team announced Friday.


The kingdom, the world's biggest oil exporter, had long refused to cut output under veteran oil minister Ali al-Naimi.

"It's all about the short-term glut that we have to deal with today, with the potential shortage months down the road", Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone.

U.S. crude production increased for a third week to 9.09 million barrels a day, the Energy Information Administration (EIA) said on Wednesday. The nation's active oil-rig count has nearly doubled since May to 617 last week, according to Baker Hughes.

The next commitments of traders reports, published on March 17 and March 20, will reveal how much of the remaining net long position was liquidated between March 8 and March 10, and give some idea of how much more needs to be liquidated before prices steady again.

The EIA (U.S. Energy Information Administration) will release its monthly Drilling Productivity report on March 13, 2017. "Opec is unlikely to react until prices get down to about US$40 a barrel".

Other reports by TheDailyFarc

Discuss This Article

FOLLOW OUR NEWSPAPER