US producers increase their oil production

The US oil producers is clearly the most satisfied group of high oil prices. The cost of raw materials declined on Friday after it became clear that OPEC and Russia could increase their production. And the latter may be the result of US production growth in an environment of rising production.
US crude oil lost about 1 percent of its value to $66.39 a barrel late Friday, while the Brent fell 0.6 percent to $77.07 and was already more than $3 below its highest since late May.
US oil production is growing at a good pace and weekly data show no signs of slowing down, according to Seaport Global analysts, adding that growth is mainly driven by Texas and New Mexico.
US oil production rose 215,000 barrels per day to 10.47 million barrels per day in March, according to the US energy ministry. Production in Texas rose 4% to 4.2 million barrels per day, while that in New Mexico - by 6.5% on a monthly basis.
Increasing production by US companies in the US is a reality when the market increasingly talks about Russia and OPEC being able to override accepted production constraints. Namely the latter were the basis of the strong rise in oil prices to a maximum of four and a half years.

Oil between $50 and $75 suits everyone

Over the past four days, US crude oil fell nearly 10 percent of the cyclical peak $73 a barrel, reaching yesterday low at $65. This poses the question - has the downward correction of the raw material been exhausted and can it start rising again?
The sharp decline in oil became a reality as a result of the data that Saudi Arabia and Russia are considering increasing production. Both parties signaled some increase in their production.
It is the trade between Russia and OPEC in the past year to curb production, triggering a strong rise in raw material prices.
Experts, however, comment that the potential resistance of some OPEC members against Saudi Arabia and Russia's decision to boost production could lead to a certain return in the price of oil.
After the peak of 115 dollars in 2011, oil was traded in a range between 115 and 75 dollars for 30 months. Such developments would mean oil price rate in the range of between $70 and $50 over the next few years. And that would perfectly suit Russia and Saudi Arabia, according to market observers.
Any oil levels above this range are already leading to some problems for consumers related to inflation, as well as an upsurge in US oil production, which is becoming profitable.
So, it seems very likely that the price of oil will be kept in a relatively narrow range over the coming years.
There are, of course, some analysts who believe that the price of oil will continue to rise and may go beyond that limit. Some of them are experts from Goldman Sachs, according to which there is an essential background for growth in the price of oil.

Oil loses more than $4 on Friday, continues to go down

The price of oil continued with its exceptionally strong depreciation on Friday and the first day of the new week. Brent futures with delivery next month lost $1.1, or 1.4% on Friday's closing level.
US crude oil fell by 1.57 dollars, or 2.3% on Friday's closing level.
Brent and US oil fell respectively by 6.4 and 9 percent of its peak in early May. In China, oil fell 4.5 percent to 459 yuan a barrel (71.83 dollars a barrel).
The rise in oil prices in recent weeks has sparked serious debates among market participants and OPEC members about the impact of oil prices on the world economy, according Chittag Ay, chief economist at Morgan Stanley.
On Friday, Saudi Arabia and Russia, which are considered to be drivers of the oil market, said some oil production growth of 1 million barrels per day was under discussion.
Production cuts were the factor that led to substantial oil prices on international markets.
With the price rise, however, the US producer of US oil is also growing, benefiting from the high oil price.
Oil prices have collapsed after reports that Saudi Arabia and Russia have agreed to increase their production in the second half of the year, ANZ said.
US energy companies have added 15 new field deposits for the week to May 25.

Oil prices rise fourth consecutive session

Oil is growing in price during the fourth consecutive session against the backdrop of growing demand for risky assets.
The price of April futures for Brent crude on the London Stock Exchange ICE Futures rose by $0.38 (0.59%) - to $65.22 per barrel.
The cost of the WTI futures contract for March in the electronic trading of the New York Mercantile Exchange (NYMEX) increased by $0.41 (0.66%) to $62.09 per barrel.
According to experts, oil prices could again shift to a decrease if another weekly report from the US Department of Energy indicates an increase in oil production in the country. At the same time, the volume of oil produced in the States is already at a record high in history.
At the end of last week, the oil service company Baker Hughes reported an increase in the number of operating oil drilling rigs in the US for the fourth week in a row - to 798.
The indicator mainly reflects the recovery of production at shale deposits. It is expected that by the next month, production at the Permian field will grow to a record 2.99 million barrels per day. With this indicator, the region could take the fourth place among all the OPEC countries.

The Brent with the highest price since 2015

Brent has risen to its highest levels since 2015 today, after an unplanned closure to repair a North Sea pipeline. This has resulted in serious supply difficulties and has helped to raise the cost of raw material.
The Brent with delivery in the next month traded at $64.73 a barrel early this morning.
Raw material has begun to rise before the meeting of OPEC, which reached agreement to extend production constraints by the end of next year. The decision was also backed by Russia.
However, this time, unlike the previous one, OPEC's decision did not lead to a sharp depreciation of the price of "black gold."
More and more analysts are starting to talk about a price of 70 or even $80 a barrel next year. The good performance of the global economy and the possible depreciation of the dollar may be the factors that will predict similar high prices.
Brent peaked yesterday, at $64.93 a barrel, or its highest price since June 2015.
US crude oil was traded at $57.98 a barrel.

Oil with a slight increase in expectations of US stocks report

Oil prices rose slightly today due to expectations of a decline in oil stocks in the United States and after the OPEC deal last week to extend production constraints.
The Brent with delivery next month added nearly one percent to its value, to a level of $63 a barrel.
US crude oil is traded in the morning at $57.40 a barrel or with no significant change from yesterday's levels.
Last week, OPEC countries agreed to continue their production restrictions at 1.8 million barrels by the end of next year. This, however, was not followed by much reaction to the price of oil.
According to Goldman Sachs analysts, Saudi Arabia and Russia have shown a strong will to continue the production constraints by lowering their forecasts for the price of Brent and US crude oil to 62 and 57.5 dollars respectively.

Short sellers are returning to oil

Once bull bets on brent have reached a historic record and commodity futures have risen to two-year highs, hedge funds are beginning to believe that growth has peaked.
Bets on falling oil prices rose most since June. This, as tensions in the Middle East began to normalize and investors again began to reduce expectations for a unified OPEC position with regard to future production constraints.
Hedge funds have cut their net long positions in Brent by 1% to 537,557 contracts for the week to November 14. At the same time, short stakes have risen by 8.7%.
More and more experts say that oil may not have come out of its range, as OPEC countries are asking for. Or it is entirely possible that the price of oil will return to levels of about 60 dollars per barrel.

Oil rally may be short-term?

Another good week for oil after the OPEC Secretary predicted global oil consumption growth to over 100 million barrels per day by 2020. Mohamed Barkindo's statement was widely welcomed by oil investors.
Investors are now beginning to ask - is the oil rally justified and how far could the price of black gold go?
The market knows that OPEC's positive comments and forecasts often are rapidly being overcomed. Especially in cases where net long positions of investors rise to high levels, as currently the case is.
Investors are aware that any forecasts coming from OPEC should be taken with a great portion of mistrust. In the end, they come from a party that is interested in a high oil price and can be manipulated.
Some experts start to worry that the price of oil has risen too much and too fast. Not only the planned repairs of US refineries expected to bring downward pressure on raw material prices, but also the number of shale growers is rising as a result of the rise in oil prices.
Oil demand from China may also fall below expectations, which is another factor to lower the price of oil.
On the other hand, the unprecedented warming of relations between Russia and Opec may be a factor that will continue to support the cost of the raw material. What will happen from now on is yet to be seen.

What can we expect for oil in the second half of the year?

For most of the first half of the year, it seemed that oil had found its balance about $50 a barrel of American sort. OPEC respects the mining constraint, with Saudi Arabia dropping its production below 10 million barrels per day. The change occurred only when stocks in the US began to grow in the second quarter. And the price of oil fell to 42.50 dollars.
Achieving a balance of the oil market remains an open question for the second half of the year. US companies report a reduction in shale oil production costs, resulting in increased drilling and production.
According to some analysts, oil is likely to reach levels of 45-55 dollars. Expectations are for this range to be maintained by the end of 2018, notably until the OPEC and Russia agreements are in force. But the fact that the price of oil comes down in a lower price range does not mean that there is a tendency for a strong depreciation of the raw material.

Oil with the worst performance for the first half of the year since 1998

The weakness of the dollar and weaker production in the US have triggered a rise in oil prices over the week. However, this did not prevented the raw material from registering its worst performance for the first half of 1998.
Brent finished the first six months of the year, at levels of nearly $49 a barrel, and US crude at $46.30 a barrel.
Thus, since the beginning of the year, the Brent has lost 15% of its value, and US crude oil - nearly 18%. This is also their biggest decline for the first six months since 19 years, statistics show.
The start of the sharp decline in oil has happened surprisingly after the decision by the OPEC countries to continue their production cuts by March next year.
The effect of the decision, however, was largely offset by the data that producers such as Nigeria and Libya virtually increased their production in May of this year.
In addition, data for a faster-than-expected growth in US production also had a negative impact on oil prices. Increased production is also present with other non-OPEC producers - including Brazil and Canada.

The oil officially entered the bearish market. Next target - $30

Oil has officially entered the bearish market after its fall yesterday. Poll Siana from Bank of America Merrill Lynch, commented in an interview with CNBC that based on graphics, oil may be headed for a level of $30 a barrel. These are levels unprecedented since April last year.
According to the technical analyst, the depreciation of oil can in practice serve as a rally for the bond markets. There is a backward movement between bond prices and oil, so if this dependence continues, the depreciation of oil can lead to a rise in bond prices.
In addition, stocks may also be in trouble if the price of oil falls. While there is no direct correlation between the potential oil depreciation and index levels, such a decrease could potentially exacerbate a possible correction for the indices.
Not very positive is the situation for oil and on the basis of a fundament. In fact, demand for oil may drop in the summer.
Since the beginning of the year, the price of oil has fallen by 19%, mainly due to increased US stocks and OPEC's inability to limit supply.
US crude oil traded at levels of 43.50 earlier this morning.

Oil below $45 a barrel

Oil fell back on Wednesday as a result of negative inputs from the IEA. After publishing moderately optimistic forecasts of "balancing" the market in recent months, the International Energy Agency has expressed concerns that this may take longer because of the accumulated record stocks.
The report comes the same week in which OPEC published its monthly report on the state of the market. It caused serious sales of the raw material as a result of the data that the cartel has increased its production last month. The OPEC report also concludes that the market is recovering at a "slower pace" than expected.
The reason for the depreciation of "black gold" in recent weeks is the growing US state producer and US oil stocks, the weaker demand for gasoline.
At a level of 292 million barrels, oil reserves in the US are significantly above the average for the past five years.

Oil with the largest decline since March

Oil decrease in price of 5% yesterday after surprise growth in oil and petroleum inventories yesterday was the biggest since March.
Data showed the biggest increase in diesel and petrol reserves in the world's largest economy since 2008 last week. The surge in inventories by 15.5 million, surprised investors seriously.
Adding to this is the reduced fuel demand of 505,000 barrels a day and the oil situation is not particularly positive.
The Middle East crisis linked to Qatar has failed to lead to a sustained rise in oil prices.
US crude oil ended yesterday at a level of $46 a barrel, trading early this morning, nearly 15 cents higher.
There are more and more marketers who say that $40 in the short term are much more likely than $50 a barrel.
As we can see, OPEC's production constraints have failed to stabilize the price of oil and lead to its steady rise.

The three questions about oil, following OPEC's decision

OPEC may extend its production constraints for another nine months, but after the initial party, the questions faced by investors are as follows:
Will the strong relations between Russia and Saudi Arabia be maintained after the agreement? Will the members of the cartel succeed in resisting the temptation of larger production, in the midst of a boom in extraction by US state-owned manufacturers? And perhaps the most important question - what is the long-term policy of OPEC countries?
The last question is very important because we saw how OPEC's policy can be radically turned to 180-degree only within a few years.
The war on US state-owned producers, and Saudi Arabia, seriously reflected on the producers themselves, and they were the first to "flicker", not to resist the low price of oil they themselves attempted to initiate. And the goal was clear - to bring US producers to bankruptcy.
What worries the experts is that there are no clear signals about the exit strategy and what the parties' policy will be after.
These concerns, among market participants, materialized in the price of oil. Brent lost 5 percent, to $51.24 a barrel after the decision, neutralizing a major part of the growth after representatives of Russia and Saudi Arabia publicly announced they would support production cuts last week.
Or have we witnessed the materialization of the market rule "buy on rumors, sell on news".

Barclays reduced its target price for oil in 2018 by $10

On Friday, analysts at Barclays (LON: BARC) lowered their forecast for the price of Brent crude oil at the end of 2018, but confirmed the trend in the increase of oil prices.
In particular, analysts have lowered the forecast of oil on the London Commodity Exchange to $67 per barrel from the previous value of $77.
The analysts at Barclays explained, that they maintain their forecast that the price increase will be by $10 higher than the current rate futures.
They also left unchanged the forecast for the average price of a barrel of Brent crude oil for 2017 at $57 per barrel, noting that the forecast for the second quarter was $62.
Analysts called the situation "a game of musical chairs", which will end as soon as the US shale oil producers to increase production, or completed action on the production reduction agreement.
According to the analysts, if OPEC agreement is not renewed, it will decline in 2018, oil prices will be more volatile when stockpiling will continue, as OPEC spare capacity.
British bank's forecast for the price of WTI crude oil was $56 per barrel in 2017 and $65 per barrel in 2018.

Oil in the red on a background of the US production growth

Oil prices fell during morning trading on Tuesday amid rising of drilling activity in the US.
By 6.27 GMT, futures for Brent oil fell by 0.11 percent to $55.17 per barrel.
Futures for WTI US crude at the same time traded at a mark of $52.49, 0.27 percent lower than the previous close.
North Sea oil fell from January's peak by more than 5.6 per cent, WTI - around 3 per cent.
The number of drilling rigs in the United States rose for the week ended 27 January, by 15 units to 566 showed Friday data of oilfield services company Baker Hughes. This is the highest value since November 2015.
Analysts believe that the increase in drilling activity and, as a consequence, production in the US can neutralize the effect of OPEC agreements and non-OPEC countries to cut production.
Brent futures for March delivery today traded at a premium above $2.7 per barrel for WTI, reflecting the balance of alignment between supply and demand on the world market due to OPEC's pact and the excess of the market in US crude because of the continuing growth in the number of drilling rigs.

Canadian dollar falls from highs due to lower oil prices

The Canadian dollar fell against its US counterpart on Tuesday, as oil rally ended as a result of profit taking by investors, as the market focused on the meeting of the Bank of Canada this week.
Pair USD/CAD rose by 0.30% to 1.3310. On Monday, the pair reached 1.3235, the lowest level since 21 October.
Oil prices fell on Tuesday to 16-month highs after data showed that the OPEC oil production reached in November another record high.
OPEC last week managed to sign an agreement on the limitation of production, which can reduce the excess of reserves of the world, which was followed by a sharp jump in oil prices, the main part of Canada's exports.
The increase in production before the coming into force in January an agreement to reduce production caused concern that the global excess of reserves can continue in 2017.

European stock indexes rose on Wednesday after oil

European stocks finished the session in the growth on Wednesday. Driver of growth was the rise of shares of energy companies, caused by OPEC agreement for limitation of the production.
The composite index of the largest companies in the region Stoxx Europe 600 rose during trading by 0,3%, to 341.99 points.
The index of 50 largest enterprises of the euro zone Euro Stoxx 50 added 0.43%. The British FTSE 100 stock indicator rose by 0.17%, the French CAC 40 - by 0.59%, the German DAX - by 0.19%.
Prices of Brent crude for delivery in February soared on Wednesday by nearly 9%, to $51.55 for a barrel on news that OPEC agreed to reduce the collective production to 32.5 million barrels a day, starting from January next year.
Countries outside of OPEC will cut output at 600 000 b/d, and 300 000 b/d of them will fall to Russia.
Shares of Total SA (PA:TOTF) rose in price by 2,4%, BP Plc (LON:BP) - by 3,8%, Royal Dutch Shell - by 4%. The capitalization of the smaller European oil and gas company Tullow Oil (LON:TLW) and Saipem SpA increased by 13% and 10%, respectively.
However, the prospect of rising fuel prices led to a decline in prices for securities airline EasyJet Plc and Air France-KLM by more than 2%.
The contract value for most metals is reduced on Wednesday, due to which the capitalization of Anglo American Plc (LON:AAL) and Rio Tinto Group (LON:RIO) has decreased by 1.6% and 2.5%, respectively, at auction in London.
The market value of the German industrial gases producer Linde AG (DE:LING) increased by 1% on the news that its US rival Praxair Inc (NYSE:PX) resumed merger talks that could lead to the creation of a giant with $60 billion market capitalization.
Quotes of pharmaceutical companies Novo Nordink increased by 3.4% thanks to the good results of the clinical trials of its production of insulin.
Meanwhile, the price of securities of Royal Bank of Scotland fell by 1.4%. The bank failed the British Central Bank stress tests.