Oil pulled higher by Libyan unrest
Market participants will be tuning in for further clues from other OPEC and non-OPEC energy ministers due to speak in Houston this week, including Saudi Arabia’s Khalid al-Falih and Russia’s Alexander Novak. WTI slipped 5 cents to $54.01 a barrel in the report week, and lost 19 cents to $53.14 a barrel at 1:57 p.m in Singapore. Royal Dutch Shell (RDSA) was off 0.1%.
The S&P 500 healthcare index fell 0.7 per cent while the NYSE Arca pharmaceutical index declined 0.9 per cent, its worst performance since January 24.
Figures released last week showed Russia’s February oil output was unchanged from January at 11.11 million barrels per day (bpd), energy ministry data showed, casting doubt on Russia’s moves to rein in output as part of a pact with oil producers past year, Reuters reports.
It wasn’t clear if Al-Falih wants all OPEC members to participate in an extension, potentially signaling a higher bar for reaching another agreement, or if he was prodding current participants to be better about adhering to the terms. Yet already, the cartel has reportedly delivered around 80 percent of the production cuts promised in December. If all goes well, though, production at the field will surge to a range of 8 to 10 million barrels a day over the next decade, from 2.3 million now, he said.
“Conformity by all member countries is going to be a criteria”, said Mr Falih, who added that some countries had yet to fulfil their pledges as part of the supply cut deal among global producers.
Hedge funds have trimmed their bullish position in crude oil by the largest amount since OPEC announced its decision to cut output in November.
The outsized Saudi cuts have kept collective compliance high, offsetting weakness elsewhere. Barkindo said OPEC was intensifying its monitoring of commercial stocks, but declined to offer specifics on where that level would be in order for the deal to be extended. The agreement was signed for the first half of 2017, with the possibility of extension. That price is high enough to bring companies back to US shale, and output there is increasing.
Later, in a discussion with IHS Vice Chairman Dan Yergin, Falih warned the oil industry has been too slow to begin investing again in long-term projects, even as the “green shoots” of the recovery in the oil market have emerged.
He told Bloomberg, “We have seen an upward revision to 2016 demand levels and also very positive macro data suggesting there’s an upside risk in growth to demand in 2017″.
“We are witnessing the start of the second wave of United States supply growth, and its size will depend on where prices go”.
Commitment to the deal started strong with the International Energy Agency (IEA) reporting record initial compliance of 90% in January. That increase would be driven not by Donald Trump’s pro-oil energy policy - which the IEA expected would take time to have an impact - but from continuing success for low-priced, shale oil drillers.