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West Texas oil manufacturers ready to thwart OPEC plans

OPEC, Russia and other big manufacturers might aid to move oil prices back to $60 per barrel or more with a new extraction deal, but that would also be a green light for U.S. shale drillers.

U.S. oil manufacturers may profit on a much wider scale if the price hits 50-60 USD. Experts say a new deal by OPEC and other drillers might boost a rebalancing of the market, but the wave of new U.S. shale wells would also unleash enough oil to cap OPEC’s price gains.

Saudi Arabia and Russia energy ministers said they would recommend that other drillers agree to an extended nine-month deal, instead of the six months. The manufacturers have agreed to hold 1.8 million barrels a day off the market. Oil gained on the news, with WTI crude edging back toward the psychological $50 per barrel level Tuesday and Brent futures just over $52.

“Basically U.S. supply is coming on faster than we anticipated. Now you have a higher inventory level to begin with, and a slower decline. That means in our view, prices are likely to be lower on average,.” – said Francisco Blanch, global head of commodities and derivatives research at Bank of America Merrill Lynch.

Blanch noted he predicts that Brent, the international benchmark, to average $54 per barrel this year from an average $61 per barrel. Yet, he just cut his prediction. For 2018, he does not predict any big growth, and he foresees Brent at $56 per barrel, versus his previous forecast of an average $65.

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