OPEC Weighs in on US Shale, Oilfield Services


"Crude oil output increased in Nigeria, Angola and Algeria, while production declined by 80,000 bpd month-on-month in Venezuela", the group said in the report.

"We should not limit our efforts to 2018".

When the Organization of Petroleum Exporting Countries (OPEC) and Russian Federation meet this weekend to review their strategy to reduce the global oil saturation, they will face an extraordinary problem: it may work too well.

After falling the previous week due to cold weather, U.S. crude production rose to 9.75 million barrels day last week.

Over the long-run, prices look well-supported because the OPEC production cuts are working to drive done global supplies.

After adding in barrels from Brazil, Canada and other growth countries, and allowing for falls in Mexico, China and elsewhere, total non-OPEC production will increase by 1.7 million barrels per day (bpd), IEA said in its latest world oil market report. They have extended the pact until the end of 2018. Their agreement on supply cuts, originally launched last January, is due to expire in December this year. Ministers from the United Arab Emirates, Iraq and Kuwait have said the deal needs to continue.

Although these factors might have faded somewhat, there are others at work, said the IEA.

"We will see compliance drop in the second half of the year (so) they are going to want to really cement the gains they have made and the rebalancing they have achieved", he added.

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OPEC's fear that another surge of shale oil could neutralize its production cuts might be coming true. "Despite the fact that progress is obvious, we must not relax".

"If prices remain high, it is U.S. shale producers who are benefiting more than the Opec producers but if Opec doesn't do anything, they will also lose out, so they are basically treading a thin line between helping themselves and helping everybody else including shale producers", Mr Manibhandu noted.

Falih said the global economy had strengthened while supply cuts - in which Saudi Arabia has shouldered by far the largest burden - had shrunk oil inventories around the world.

But Novak but appeared less committed to the idea of establishing a permanent framework.

According to the report, the country's year to date average heavy crude price stood at $51.71 nearly $12.14 more than the figure for last year's same time span.

"Shale will grow but I think it is a big market", he said. And demand growth could surprise markets. "By the end of this year, the stock level will be very small and it will be time to discuss different arrangements or agreements", he said.

That, combined with low oil prices, pushed the country into its first recession in a quarter of a century - crude sales make up two-thirds of government revenue and most of its foreign exchange.