OPEC has shown unusual discipline in sticking to production cuts in the first half of 2017. We asked traders, will OPEC extend cuts beyond June in the face of increases in U.S. shale production and what would that mean for price.
The biggest, best, massive tax cut plan in all human history was not enough to shake the petroleum sector out of its bearish slumber. The petroleum sector has been dripping down slowly like a good old fashion water torture as the market is fixated on short-term supplies and not our future. While the market continues to believe that shale oil is going to plug the gap in the global oil market, it will at some point find out that shale oil is a band-aid on what is becoming a gaping wound.
Crude oil prices are dead with Rig-or Mortis, or the adding of oil rigs weigh on market sentiment. Shale producers are expected to continue leverage up to the hilt with some producing the type of oil that no one really wants with hope that prices do not crash and drive them into bankruptcy. The confidence of the shale producers comes from OPEC which is astounding the world by adhering to production cuts.
Oil edged higher on Wednesday as OPEC said it was committed to eroding a global surplus of crude, but increasing shale production in the United States and still-high global stocks threatened to pull prices lower.
U.S. shale producers are drilling at the highest rate in 18 months but have left a record number of wells unfinished in the largest oilfield in the country – a sign that output may not rise as swiftly as drilling activity would indicate.