Wednesday witnessed a reduction in oil prices as American producers were expected to boost output even as OPEC suggested that a global supply-reduction deal would cause the oil glut to shrink.
The international benchmark for oil prices, Brent crude futures were down 75 cents $54.72 a barrel at 1230 GMT, reports Reuters.
Similarly, the United States West Texas Intermediate (WTI) crude oil futures recorded a low 81 cents at $51.67 per barrel.
The U.S. Energy Information Administration said that there is likelihood for the U.S. shale production to go down for three consecutive months starting February. All this is happening at a time when energy firms are increasing drilling activities as crude prices hover near 18-month highs.
The EIA reported that the February production will edge up 40,750 barrels daily.
With an exception of Indonesia, the Organization of the Petroleum Exporting Countries production was 33.085 million barrels per day in December 2016. These rates are estimates by OPEC basing on data picked from secondary. This was a decline of 221,000 barrels per day when compared to the November production.
OPEC had to set in plans on how to lower the production after Russia and other non-members jointly advocated for limiting oil production.
Via The Times
OPEC now expects non-OPEC supply to rise by 120,000 bpd this year, down from growth of 300,000 bpd last month, despite an upwardly revised forecast of U.S. supply.
Demand and Supply
According to a recently struck deal, OPEC, Russia and non-members are now jointly involved in lowering production by at least 1.8 million barrels per day in attempts to ensure demand and supply are in line.
According to a BMI research, these proposed cuts will mainly originate from field and refinery maintenance. The research suggested that oil producers will utilize declining volumes required for domestic power generation so as to ensure export volumes are maintained.
“Sticking to output targets is important but export volumes from the participating countries are a much better indicator of how the cuts will affect the market,” it said.
There will be a meeting on 21 to 22 January of the committee tasked with ensuring the agreement is adhered to.