Oil prices extend losses amid rising U.S. output

By Azernews

By Nigar Abbasova

Despite oil producer’s high compliance with supply cut deal, rising oil output in the U.S. is still setting the alarm bells ringing in the energy market.

Oil prices negatively reacted to the signs of growing output in the United States on January 30 extending slight declines amid forecasts that high activity in the U.S. could partly overshadow output cuts.

Brent crude futures dropped almost 28 cents to $55.24 a barrel, while West Texas Intermediate (WTI) was 27 cents down and stood at $52.90 per barrel, Reuters reported.

Rig count from Baker Hughes showed that drillers added some 15 oil rigs last week, bringing the total count to 566, a record-high figure since November 2015.

Meanwhile, International Energy Agency (IEA) forecasts total U.S. output growth of 320,000 bpd in 2017 to an average of 12.8 million bpd.

Monthly Energy Review of the Agency said the volume of petroleum import from OPEC countries averaged 3.428 million barrels per day in the first ten months of 2016, as compared to averagely 2.829 million barrels per day in the same period in 2015, with the highest volume of import falling to a share of July (3.803 million bpd) and the lowest being observed in January (3.052 million bpd).  

The volume of oil import from non-cartel states in the reported period averaged 6.631 million bpd, as compared to averagely 6.619 million bpd in the same period in 2015.  Oil production from countries outside the OPEC currently represents about 60 percent of world oil output, according to the EIA.

All hopes for rebalancing are now pinned on reductions being made by OPEC in tandem with other major producers. A strong start by the cartel and other producers in implementing a supply cut deal increased optimism that reductions would by far exceed any rise in the U.S and oust glut in the global inventory.