Oil still can sharply drop in price

As January came, the pact on oil output cut for maintaining prices signed by oil producing countries has came into force according to schedule.

03.Jan.17 10:47 AM
By Anna Tuzova
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First data on oil production decrease might begin to flow in several following weeks – approximately when the new president of the USA Donald Trump will take office.

To be reminded, the OPEC undertook to reduce the production by 1,2 million barrel per a day, as non-OPEC countries agreed to decrease the daily output almost by 600 thousand barrels.

According to the research provided by the Federal Reserve Bank (FRB) of Dallas, held in December, 50% of respondents thinks that OPEC’s agreement will not be respected. Less than 50% anticipates that oil market will reach the balance of demand and supply in the third quarter of 2017. 147 energy companies took part in the survey. Among the respondents 67 companies engaged in exploration and producing, while 80 are service companies.

At the same time the oil price growth caused by signing the agreement by OPEC+ contributes to intensification of shale oil producers in the USA: the number of active drilling rigs have been growing since mid 2016 and equalled or came very close to the beginning of the year level. According to the Energy Information Administration (EIA), the figure reached 401 in November, which is the highest level since the previous January.

The EIA predicts the growth of shale oil production level in the USA. The American oil producing companies’ budget for investments has grown to 13-20%, according to the agency’s report. The EIA has figured that the total productions of oil in the USA will grow by 250 barrels by the end of 2017.

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