Oil producers to cooperate after 2018: Saudi minister

Oil producers to cooperate after 2018: Saudi minister

February natural gas edged down by 0.1% to $3.185 per million British thermal units. The Dubai crude oil price rose from approximately US$53 per barrel to over US$61 per barrel between January and December 2017 while the WTI price rose from US$52 to US$57 per barrel. The implication of that for prices is clear - if the IEA is right, the possibility that oil reaches $100 a barrel is remote.

"Additionally, global crude oil markets saw an exceptionally tight fourth quarter in 2017 as the large draw in OECD crude stocks coincided with a decline in Chinese implied crude balances".

This month's OPEC report says it expects total U.S. crude supply to increase by 110,000 barrels a day in the year ahead. Both countries, however, have agreed to ease production to push up prices. In the Eagle Ford Shale in south Texas, output should rise by 15,000 barrels a day to 1.26 million barrels a day.

Oil reserves surplus is diminishing rapidly and there are increasing signs of the dangers that high prices pose for OPEC, according to Bloomberg.

The agency previously said U.S. output could reach 10 million bpd in February and 11 million bpd in 2019.

OPEC estimated its crude supply at an average of 32.9m bbl/day in 2017, which it projects will increase slightly in 2018 to 33.1m bbl/day.

IEA estimated OPEC supply cut compliance at 95%, although supply discipline from the non-OPEC signatories to the deal - including Russia, Kazakhstan and Malaysia - was less strong, at around 82%. The increase in shale production is also a way to offset rising demand, in particular from China.

OPEC and its allies will meet over the weekend in Oman to discuss how oil production cuts implemented previous year are working out. Consequently, the United States oil output has grown sharply over the last few months.

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After falling the previous week due to cold weather, USA crude production rose 258,000 barrels per day to 9.75 million bpd last week. In November, it was reported that OPEC production fell for a fourth straight month.

Saudi Arabia, the world's biggest oil exporter, urged major global oil producers to extend their cooperation that has helped prop up the crude prices to highest level in three years in recent weeks beyond 2018, and indicated that a deal next year may take a new shape. The catalyst behind the selling pressure was concern over rising us production.

Oil prices rebounded from earlier losses, but gains were minimal.

At this rate of weekly growth, USA drillers could hit the 10-million-bpd mark much sooner than expected unless they deliberately decide to rein in production to stop prices from falling. Rising prices can have a chilling effect on demand growth, and benchmark crude prices have risen more than 55 per cent since their rally started in June. USA crude production rose again last week to reach 9.75 mbpd.

The IEA, as I noted last week, is much less bullish about demand growth in the coming months than other pundits.

The comments are the first public mention of a potential new form of coordination between Opec and non-Opec producers including Russian Federation into 2019.

But, some observers of events on the oil market note, why would OPEC, or rather Saudi Arabia, want to talk prices down ahead of Aramco's IPO?

Mr. Falih pointed to weaknesses in the deal, saying the first OPEC-led output cuts in nearly a decade had yet to instill enough confidence in the oil industry for investment in expensive projects.