Oil has declined amid worries that OPEC prolongation of abridged mining could lead to a sharp rise in shale yields in the United States.
Last week, OPEC, Russia and other producer countries agreed to continue the cut production by the end of next year. North American producers are likely to increase their mining costs by 20% next year, according to an Evercore ISI study on industry budget trends.
The danger of a new OPEC agreement is that the activity of shale deposits in the United States will increase, and that is certain. However, Baker Huges data shows that the number of shale platforms is at a record level, and given that oil has passed the profitable $55 mark, the growth in the number of new platforms is almost certain.
Pioneer Financial Resources Financial Director Richard Deale said he plans to increase production to over 1 million barrels of oil equivalent per day by 2026. from around 300,000 a day during this quarter.
According to Commerzbank AG, OPEC deal will mainly work for non-OPEC. Even if OPEC delivers the promised cuts and the prices remain high long enough, the main result will be that US shale extraction will add about 1 million barrels a day further. "
Citigroup predicts that the market will be balanced in 2018, but it is bearish for 2019. with a forecast for the Brent variety of $49 a barrel, as OPEC supplies will decrease but will increase from Brazil and Russia.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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