Oil prices slide once again
Crude was down slightly on Friday as expectations that OPEC and other producers will extend their production cut agreement were offset by U.S. drillers adding the most oil rigs in a week since June, indicating output will continue to grow. As Reuters writes in an article "Oil prices slide after U.S. drillers add rigs", U.S. energy companies added nine oil drilling rigs this week, the second increase in three weeks, bringing the total count up to 738, General Electric Co’s Baker Hughes energy services firm said in its closely followed report.
Brent futures fell 41 cents, or 0.6 percent, to $63.52 a barrel, while U.S. West Texas Intermediate crude settled down 43 cents at $56.74 per barrel. Earlier in the week, Brent rose to $64.65, its highest since June 2015, and WTI hit $57.92, its highest since July 2015. Both contracts were rose more than 2 percent this week, which was the fifth consecutive increase. Traders said higher prices in recent weeks were the result of efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to tighten the market by cutting output, as well as strong demand and rising political tensions.
There are also expectations in the market that OPEC’s next meeting on Nov. 30 will agree to extend cuts beyond the current expiry date in March 2018.
“Market participants expect OPEC to extend the production cuts beyond March 2018 and stocks to decline further,” analysts at Commerzbank said, noting, however, that “the higher price level should lead to a further rise in U.S. shale oil production.”
U.S. production was forecast to rise to 9.2 million barrels per day (bpd) in 2017 and a record 10.0 million bpd in 2018 from 8.9 million bpd in 2016, according to federal energy projections this week. Output peaked at 9.6 million bpd in 1970.
Goldman Sachs also warned of greater price volatility ahead, citing rising tensions in the Middle East, especially between OPEC members Saudi Arabia and Iran, along with soaring U.S. oil production.