Energy - - Mar 20,2017
On Monday, the oil prices dipped due to rising US drilling activity as well as steady supplies from OPEC countries despite publicized production trims.
According to traders, the prices were under pressure as a result of rising US drilling activity which was further accompanied with the ongoing high supplies by the Organization of the Petroleum Exporting Countries (OPEC) in spite of its agreement to trim output by an amount of 1.8 million barrels per day (bpd) with other prime producers like Russia.
Prices for the international benchmark for oil, Brent crude futures, were noted to be 20 cents below at $51.56 per barrel.
Also, U.S. West Texas Intermediate (WTI) crude futures were lowered by 28 cents at $48.50 a barrel.
In the week to March 17, the US drillers enhanced the rig count by an additional 14 rigs, bringing the total figure up to 631; it is the highest since September 2015, as reported by energy services firm Baker Hughes.
This action has led to the rise in US oil output with figures shooting over 9.1 million bpd. It is seen as a prominent rise since June last year when the output was somewhere below 8.5 million bpd.
According to some analysts, the markets are expected to tighten soon. Their argument is based on the fact that, the OPEC-led cuts will start to pour an effect from April.
"The cuts in OPEC production from the start of 2017 should start to show up between mid-March (now) and mid-April”, analysts at AB Bernstein said on Monday. They also added, over the coming weeks there are expectations of a sharp decrease in imports as well as an increase in refining runs which might result in “impressive crude inventory draws”.