Energy - - Jan 30,2017
On Monday, the decline in the oil prices extended due to significant signs of surging output in the United States.
This further drop in oil prices due to increasing US output could partly offset output reduction by OPEC and other major producers.
Uncertainty over the viewpoint for U.S policy also largely weighed on financial markets after President Donald Trump announced immigration curbs which sparked criticism at home as well as abroad.
However, oil trading was soft with several Asian countries, including China, on holiday for the Lunar New Year.
London Brent crude for March delivery had dipped 28 cents to $55.24 a barrel by 0417 GMT, after resolving down 72 cents on Friday.
For March delivery NYMEX crude was down 27 cents at $52.90 a barrel.
According to stats by Baker Hughes, the U.S. weekly oil and gas rig count revealed that U.S. drillers added 15 oil rigs last week, raising the total count to 566, the highest since November 2015.
The International Energy Agency forecasted that the US oil production is on a rise with total output growth of 320,000 bpd in 2017, moving to an average of 12.8 million bpd. This has indeed led to oil price decline and surely a worry for the OPEC.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers, such as Russia, had agreed to cut output by almost 1.8 million barrels per day (bpd) designated for the first half of 2017 to release a two-year supply threat.
ANZ bank said in a note, “"The rise in U.S. output should not be unexpected.”
The bank further added, it expects that the reductions being made by OPEC will far overdo any rise in the U.S. and swiftly reduce the global inventory that has been piled up over the past two years.