GulfBase Live Support
Oil risks sliding back under $60 (Dh220) a barrel as a surge in US shipments to Asia threatens to undermine a deal between Opec and its allies, according to ING Group NV.
While the producer group complied with a pledge to curb output and ease a glut in 2017, US flows that are gaining a bigger slice of the prized Asian market may prompt some nations to boost supplies, said Warren Patterson, a commodities strategist at the Dutch bank. The resulting fallout could drag down crude prices after a rally of more than 40 per cent since June, he said.
“The longer the deal goes on, it’s going to start falling apart,” Patterson said in an interview in Singapore, referring to an output-cut agreement between the Organisation of Petroleum Exporting Countries and other producers including Russia. “They continue to give market share away to the US.” Brent crude, the benchmark for more than half the world’s oil, traded at $65.45 a barrel at 7am in London on Monday, compared with about $45 in June. ING forecasts Brent at $57 in the second half of 2018. Prices were at more than $115 in mid-2014, before a global glut sparked the biggest crash in a generation. West Texas Intermediate, the US marker, is currently near $62 a barrel.
Crude’s rebound since last year is encouraging American drillers to pump even as they make efforts to be disciplined on spending, Patterson said. “We need to see prices in the short-term trade below $60 to reduce that incentive for US producers,” he said.
As American output continues to expand, more exports will sail to Asia, the traditional bastion of Middle East producers. In February, even Saudi Arabia’s state oil company considered participating in these flows via a US unit, before determining it wasn’t economically viable at the time.
ING’s outlook is in contrast to bullish views from Royal Bank of Canada and Goldman Sachs Group Inc. to BMI Research and Societe Generale SA, which see prices supported as strong demand soaks up supply from the US While Patterson does see healthy oil consumption, he said growth may slow and fail to completely absorb gaining American output.
While the US is now pumping more than 10 million barrels a day, surpassing a record set in 1970, that boom is being accompanied by a surge in overseas shipments, helping drain stockpiles at the nation’s largest storage hub. Exports have averaged about 1.5 million barrels over the past six months, almost double the level in the previous six months, Energy Information Administration data show. Asia is the biggest buyer of the supplies. Opec should beware as US shale producers are set to steal a bigger slice of the market in Asia, which consumes more oil than any other region, according to industry consultant Wood Mackenzie Ltd. Crude shipped overseas from the US will soar to almost 4 million barrels a day by the mid-2020s, rivalling shipments from Iraq and Canada, it said last week.
Asia is “a market that the Middle East does not really want to give up,” ING’s Patterson said. “We think compliance is likely to slip. The deal will still officially be in place, but once we get into 2019 there’s no chance that we will see some sort of deal.”
Opec and its allies held further discussions about changing the way they measure the impact of their production cuts, including proposals that would affect how quickly they hit their target, accordin
Oil prices edged up on Tuesday, lifted by geopolitical tensions, although rising output in the United States and shaky stock markets put a lid on further gains. US West Texas Intermediate (WTI) crude
Oman Daily Observer
Oil slipped as US explorers resumed their drilling binge, raising concerns over whether output cuts by Opec and its allies will be enough to clear a glut despite a pledge from Russia that it’s commit
Oil held above $61 (Dh223.87) a barrel, paring the weekly loss, as investors weighed surging US crude production against a warning from the International Energy Agency of an impending shortfall in gl
Oman’s crude oil and condensate production for February 2018 reached 27,075,580 barrels, with a daily average of 966,985 barrels, according to the monthly report issued by the Ministry of Oil and Gas
Times of Oman