Oil prices back in the $50s as markets expect fresh OPEC deal

As oil falls to US$45, Citi says another round of cost-cutting would be 'even more painful'

United States crude production has risen more than 10% since its mid-2016 trough to more than 9.3-million barrels per day, close to the levels of top producers Russian Federation and Saudi Arabia.

"Owing to the rapid recovery in US oil production, OPEC obviously only has limited influence on prices via supply curbs", it said, adding an extension "is unlikely to be more successful than the cuts implemented so far in the longer-term".

"Global markets continued to support the value of multiple-region destination grades, such as Arab Light, Basrah Light, Iran Heavy and Kuwait Export", OPEC said in the report.

It also forced US producers to become more efficient, and they can now withstand much lower prices than just a few years ago.

"Owing to the rapid recovery in US oil production OPEC obviously only has limited influence on prices via supply curbs", it said, adding an extension "is unlikely to be more successful than the cuts implemented so far in the longer-term". It showed the resilience of USA shale production, and it dramatically cut spending in capital intensive projects in non-OPEC producers.

But if rapid production growth in USA shale fields keeps prices in the US$50 to US$60 range, producers will need to reduce costs by another 20 to 25 per cent, the analysts estimate. If they don't, Glickman said, "they'll take the floor out from oil prices".


OPEC is broadening the number of nations who have joined production cuts.

So far, OPEC hasn't been able to "cut supplies faster than shale oil can increase", said Olivier Jakob of consultant Petromatrix GmbH.

"Owing to the rapid recovery in U.S". With their financial future relatively secure, they started deploying rigs. A lot more is coming.

Pioneer has already hedged more than 20% of next year's oil production and 15% of its gas volumes for 2018 as well, CEO Tim Dove told analysts on the call. "Even in a $40 world, in a $50 world, we are making good returns".

Norwegian consultancy Rystad Energy said USA output had gained "significant momentum".

"OECD stocks of crude and products have come down a little but incremental demand growth was less than 1m b/d in the first quarter and global stocks remain high", Mr Bake said.

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