Oil prices slipped again, even though no high activity is present now in the markets. The reason for it is an ever-growing number of new drilling platforms in US, which thwarts OPEC plans to cut oil production.
Trading was supressed by public holidays in China, the United States and Britain, but concerns stayed there as investors are afraid if OPEC action would be enough to stop oversupply. Brent crude futures were trading down 19 cents at $51.96 per barrel. US WTI crude futures also slipped by 19 cents to $49.61 per barrel.
Carsten Fritsch from Commerzbank dubbed Monday’s price fluctuations little more than “intraday noise”.
Even though cuts were omnipresent, oil prices have not grown much beyond $50 per barrel. OPEC’s success in gathering inventories may articulate an output in the United States, which is not partaking in the cuts. U.S. extraction has grown by 10 percent since mid-2016 to more than 9.3 million bpd, close to Russia and Saudi Arabia levels.
U.S. drillers have open platforms for 19 straight weeks, using now the total of 722, the highest number since April 2015 and the longest run of additions on record.
Practically, all of the recent U.S. output rises have been onshore, from the so-called shale oil fields.
Even if the driling platform count did not grow any further, Goldman Sachs said it estimated U.S. output would go up by 785,000 bpd between the fourth quarter of 2016 and the fourth quarter of 2017. Experts say that decreasing global stocks will be vital to cutting oversupply.
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