IEA: $65-70 Oil Could Cause Surge In US Shale Production

Lester Mason
January 13, 2018

A barrel of West Texas Intermediate rose 61 cents to settle at $63.57 U.S. in NY, after having traded even higher earlier in the day. The contract broke above $70 on Thursday for the first time since December 2014. West Texas Intermediate the day before rose to its strongest since late 2014 at $64.77.

Speaking to the media at an energy forum in the UAE, Al-Mazrouei said, "I have no doubt that the market needs further correction".

For most of 2017, the resurgence of US crude oil production was capping price gains and offset part of the production cuts that OPEC and its Russia-led non-OPEC partners have been implementing since January a year ago.

Analysts and traders have warned about the risk of a price correction since the start of 2018, but they say overall market conditions remain strong, mainly due to output cuts led by Organization of the Petroleum Exporting Countries and Russian Federation. According to the Q4 Dallas Fed Energy Survey published at end-December, 42 percent of executives at 132 oil and gas firms expect the US oil rig count to substantially increase if WTI prices are between $61 and $65 a barrel. But Opec secretary general Mohammed Barkindo said there was "no panic" about rising prices.

"We don't look at the price in a day and say we are in a point where we need to do changes". EIA's latest Short-Term Energy Outlook (STEO) from earlier this week estimated that US crude oil production averaged 9.3 million bpd in the whole of 2017, and 9.9 million bpd in December alone.

According to CNBC, Suhail al-Mazrouei, the UAE oil minister and OPEC president, said the alliance between OPEC and non-OPEC producers, such as Russian Federation, could continue beyond the December 2018 deadline in an attempt to stabilise oil markets.

Meanwhile in Mumbai, Icra in its report said the continuing surge in crude prices is likely to continue till March, impacting inflation, balance of payments and fiscal policy.

Other reports by Iphone Fresh

Discuss This Article