Oil prices fall as increased US drilling points to higher output

Soaring US output, as well as rising output in Canada and Brazil, is undermining efforts by the OPEC to curb supplies and bolster prices. (Reuters)
Updated 19 March 2018
0

Oil prices fall as increased US drilling points to higher output

SINGAPORE: Oil prices fell on Monday as increased drilling in the United States pointed to more output, raising concerns about a return of oversupply.
US West Texas Intermediate (WTI) crude futures were at $62.02 a barrel at 0350 GMT, down 32 cents, or 0.5 percent, from their previous close.
Brent crude futures were at $65.85 per barrel, down 36 cents, or 0.5 percent.
Monday’s price falls in part reversed increases last Friday, which came on concerns over tensions in the Middle East.
On a simple supply versus demand basis, however, oil markets are facing the possibility of a renewed glut after being in a slight deficit for much of last year.
US drillers added four oil rigs in the week to March 16, bringing the total count to 800, the weekly Baker Hughes drilling report said on Friday.
“Surging US production will hamper exponential growth in crude oil prices,” Singapore-based brokerage Phillip Futures said on Monday.
The US rig count, an early indicator of future output, is much higher than a year ago as energy companies have boosted spending.
Thanks to the high drilling activity, US crude oil production has risen by more than a fifth since mid-2016, to 10.38 million barrels per day (bpd), pushing it past top exporter Saudi Arabia.
Only Russia produces more, at around 11 million bpd, although US output is expected to overtake Russia’s later this year as well.
Soaring US output, as well as rising output in Canada and Brazil, is undermining efforts by the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) to curb supplies and bolster prices.
Many analysts expect global oil markets to flip from slight undersupply in 2017 and early this year into oversupply later in 2018.
One risk to supplies, however, is Venezuela.
“Concerns that Venezuelan output is on the verge of collapse continue to swirl around the market,” ANZ bank said.
The International Energy Agency said last week that Venezuela, where an economic crisis has cut oil production by almost half since early 2005 to well below 2 million bpd, was “clearly vulnerable to an accelerated decline,” and that such a disruption could tip global markets into deficit despite soaring US output.
“We remain bearish on the future direction of its (Venezuela’s) oil sector, with production ... averaging 1.535 million bpd, down 379,000 bpd on average over the year,” BMI Research said.


VW to stop doing business in Iran: Bloomberg

Updated 20 September 2018
0

VW to stop doing business in Iran: Bloomberg

  • VW will still be able to do some business in Iran under a humanitarian exception
  • VW has scrapped plans it announced in July last year to sell cars in Iran for the first time in 17 years

WASHINGTON: Volkswagen has bowed to American pressure stemming from the US rejection of the multi-party nuclear deal and will end almost all business in Iran, Bloomberg News reported Wednesday.
The accord was reached Tuesday after weeks of talks between the German auto giant and the administration of President Donald Trump, said Richard Grenell, the US Ambassador to Germany, according to Bloomberg.
VW will still be able to do some business in Iran under a humanitarian exception, Bloomberg added.
In May, Trump pulled the US out of the deal it reached with Iran and five other countries in 2015. That accord lifted sanctions against Tehran in exchange for restrictions on its nuclear program.
Now, the US is reimposing those sanctions.
Bloomberg said VW has scrapped plans it announced in July last year to sell cars in Iran for the first time in 17 years.