Supply estimates drag oil prices lower early Monday
Crude oil prices continued their downward slide as market watchers took stock Monday of production estimates from countries outside of OPEC. The Organization of Petroleum Exporting Countries said production from non-member states was falling less dramatically than it initially expected. Shale oil players in the United States were learning to adjust to lower oil prices, Norway was producing better than anticipated and oil from the Kashagan field, one of the largest in the world, was in the early stages of production offshore Kazakhstan.
"It is expected that there will be higher non-OPEC production in the second half of the year compared to the first half, stemming from oil sands production that was shut down due to wildfires in Canada, as well as a continued rise in U.S. rig counts, the end of seasonal maintenance and the start-up of new projects," the OPEC monthly market report for September read.
A collapse in oil prices Friday was supported by a reported increase in the number of rigs actively exploring for or producing oil and gas in the United States. Rig counts are a loose metric to gauge how confident some energy companies are in a market recovery.
During the weekend, Jeff Currie, a commodity analyst at Goldman Sachs, said productivity in U.S. shale oil basins had improved so that the price point at which companies break even was moving from $55 per barrel to $50 per barrel. In its market report, OPEC said U.S. oil production was expected to decline more slowly than previously expected even though oil prices remain more or less on par with what they were one year ago.
The shale oil production boom two years ago helped push oil below $100 per barrel.
The price for Brent crude oil was down 1.4 percent at the start of trading Monday to $47.34 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, wasdown 1.6 percent to open at $45.15 per barrel in New York.
The move in oil prices followed recent comments from Algerian Energy Minister Noureddine Bouterfa that he was upbeat about the prospects for some form of corrective action among fellow ministers during meetings in his country later in September.
"We are in contact with the members and the secretary general of OPEC, it is part of the consensus (process) and I am optimistic," he told the official Algeria Press Service. OPEC members are considering holding output steady to influence prices. The September market report said, meanwhile, that oil demand growth was expected to increase in 2016.