The head of the International Energy Agency (IEA) stated on Thursday, investment in current oil production is expected to decline for a 3rd year in 2017 as a global supply glut continues, strengthening volatility in crude markets.
“Our analysis shows we are entering a period of greater oil price volatility (partly) as a result of three years in a row of global oil investments in decline: in 2015, 2016 and most likely 2017,” IEA director general Fatih Birol said at an energy conference in Tokyo.
“This is the first time in the history of oil that investments are declining three years in a row,” he said, adding that this would cause “difficulties” in global oil markets in a few years.
After nearly a month, oil prices have increased to their highest, as the anticipations increase among traders and investors that OPEC will decide to reduce output. However, market watchers reckon an agreement may pack less punch than Saudi Arabia and its associates want.
The Organization of the Petroleum Exporting Countries (OPEC) meets the upcoming week to try to decide on the production curbs.
U.S. shale oil producers will surge their production if oil prices touched $60 a barrel, meaning Organization of the Petroleum Exporting Countries (OPEC) will have to walk a fine line if it curtails production to prop up prices, Birol said the previous week. On Thursday, Brent crude increased $49 a barrel.
“He said that level would be enough for many U.S. shale companies to restart stalled production, although it would take around nine months for the new supply to reach the market.”
On Additional News
U.S. crude oil stocks decline the previous week after three straight weeks of builds as imports declined and refineries hiked production, although gasoline inventories increase suddenly during a weak demand, the U.S. Energy Information Administration presented a data on Wednesday.
Crude inventories drop 1.3 million barrels in the week to Nov. 18, compared with expectations for a surge of 671,000 barrels. Stocks at the Cushing, Oklahoma, a delivery hub for crude futures drop 87,000 barrels, the EIA said.
Crude oil prices were rather stable after the data, as the market continues to ready for next week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC).
U.S. crude futures oil increase 19 cents, or 0.4%, to $48.22 a barrel, while Brent crude increased 15 cents, or 0.3%, to $49.27 a barrel.
U.S. crude imports decline the previous by 833,000 barrels per day.
Refinery crude runs surges 271,000 barrels per day and utilization rates increased 1.6 percentage points to 90.8% of total capacity, EIA data showed.
Gasoline stocks increased 2.3 million barrels, compared with analysts’ expectations in a Reuters poll for a 643,000-barrel improvement.
Over the past four weeks, gasoline demand was 9.2 mln barrels per day, only 0.6% higher from a year before.
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