Latest news with #oilproducers
Al Arabiya
a day ago
- Business
- Al Arabiya
OPEC+ agrees further accelerated oil output hike for July
OPEC+ agreed on Saturday to hike July oil output by 411,000 barrels per day (bpd), the same as in May and June, as the group of oil-producing countries continues to bring back supply more rapidly than earlier planned. In a statement issued after a meeting, OPEC+ cited a 'steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories' as its reasoning for the July increase. OPEC+ pumps about half of the world's oil and includes OPEC members and allies such as Russia.
Reuters
2 days ago
- Business
- Reuters
Take Five: Plot twist
LONDON, May 30 (Reuters) - U.S. jobs data, a European Central Bank meeting and big global oil producers all vie for investor attention in coming days. And as a new month dawns, court rulings on U.S. President Donald Trump's tariffs suggest further plot twists to the trade story. Here's what's coming up in the week ahead in world markets from Lewis Krauskopf in New York, Rae Wee in Singapore, and Yoruk Bahceli, Dhara Ranasinghe and Alex Lawler in London. As ever-changing tariff developments muddy the growth outlook, the May U.S. jobs report will provide key insight into the state of the economy heading into another bout of trade turbulence. Next Friday's report is expected to show the economy created 130,000 new jobs, according to a Reuters poll, down from a higher-than-expected 177,000 in April. The data comes as Federal Reserve officials acknowledge they could face "difficult tradeoffs" in coming months with rising inflation alongside rising unemployment, minutes from their latest meeting show. Investors have reduced bets on the amount of expected Fed monetary policy easing, with fewer than two rate cuts now priced in by December. They're also watching the progress of tax-and-spending legislation in Washington, with Trump ally Elon Musk arguing that the tax bill detracts from efforts to reduce the budget deficit. A quarter-point ECB interest rate cut on June 5 that takes the key rate to 2% is a done deal for traders. The question now is whether the ECB pauses after what will be an eighth rate reduction in the past year. Economists expect the ECB to hold steady come July before cutting once more before year-end. The economy is holding up better than anticipated and pausing allows ECB chief Christine Lagarde time to assess the impact of U.S. tariffs. Euro zone inflation data on Tuesday could show headline inflation hit the ECB's 2% target in May. Finally, expect Lagarde to be put on the spot about whether she's likely to complete her term after a press report that she held talks about leaving early to lead the World Economic Forum. Eight OPEC+ members, in the process of gradually raising output, should meet online on Saturday to decide on an increase in oil production in July. They may agree an output hike of 411,000 barrels per day, the same as in May and June, OPEC+ delegates tell Reuters. Others say the number is yet to be decided. OPEC+ pumps about half the world's oil and has agreed three layers of output cuts since 2022 to support oil prices. Two of these are in place until end-2026, one is currently being unwound by the eight members. The May and June hikes are faster than originally planned. The strategy of producers Saudi Arabia and Russia is partly to punish over-producing allies and win back market share. OPEC+ cites healthy market fundamentals as its reasoning. Oil hit four-year lows in April below $60 after OPEC+ announced accelerating output hikes and as U.S. tariffs stoked growth worries. It has recovered to about $65 but is still down 13% for the year so far. Upcoming inflation readings across emerging Asian economies could give investors further clarity on the extent policymakers in the region could go in cutting rates. Central banks like Bank Indonesia have already resumed easing cycles recently and the market consensus is for more to come, as Trump's sweeping tariffs pose significant headwinds to growth in export-reliant Asia. With inflation trending downwards and amid a recent surge in Asian currencies, policymakers have found greater comfort in lowering rates. The question now is by how much. The Asian Development Bank expects growth in developing Asia will ease slightly in 2025 to its slowest pace since 2022. Elsewhere, Australia releases first-quarter growth data on Wednesday. The numbers pre-date April's tariff chaos so any optimism from an upbeat number is likely to be short-lived. Investors must be relieved to leave behind another roller-coaster month. But the back-and-forth in the courts on Trump's tariffs heightens uncertainty ahead. Still, there's no stopping world stocks, which have long forgotten their "Liberation Day" losses. The S&P 500 index, up over 6% in May, is set for its best performance since November. The picture is bleaker with focus on fiscal discipline, underscored by the U.S. losing its last top AAA rating. U.S. 30-year Treasury yields are holding around 5% and led a recent global bond selloff, with Trump's sweeping tax and spending bill seen further raising the already-high U.S. budget deficit. The dollar has remained 4% lower since April 2 when Trump announced his tariffs. Debt worries reverberate elsewhere. Japan, where longer-dated bond yields soared to record highs and the sale of such debt has seen tepid demand, remains in focus.
Free Malaysia Today
3 days ago
- Business
- Free Malaysia Today
Opec must squeeze US shale much more to win oil price war
Benchmark US oil prices have dropped by nearly a quarter since January to US$61 a barrel, in response to Opec+'s strategy and concerns over trade wars. (File pic) LONDON : Oil drillers in the US shale heartland are slowing down operations, a sign that the Organization of the Petroleum Exporting Countries' (Opec) high-stakes price war is starting to pay off, but Saudi Arabia will need to exert a lot more pain to make a lasting impact on market share. US oil producers upended the global market in the early 2010s, as the innovative 'fracking' drilling technique allowed them to tap vast onshore shale formations. Consequently, the US, long the world's top oil consumer, became its leading producer as of 2018. It currently pumps around 13.5 million barrels per day (bpd), around 13% of world supplies. The rising tide of US oil has long irked the Opec, which has seen its market share steadily erode over the past two decades. Saudi Arabia, Opec's de-facto leader, in 2014 sought to curb surging US output by flooding the market with cheap oil. This effort bankrupted a number of shale producers, but it only temporarily paused the country's ascent as companies adapted to lower prices and the industry consolidated. Price war redux Riyadh and its allies, a group known as Opec+, are now giving it another go. They surprised the market earlier this year by announcing that they would rapidly unwind 2.2 million bpd of production cuts introduced in 2024. The group is expected to announce further increases in production later this week. Benchmark US oil prices have dropped by nearly a quarter since January to around US$61 a barrel in response to Opec+'s strategy as well as concerns over US President Donald Trump's trade wars. At these prices, many shale wells are not profitable, as frackers require an oil price of between US$61 and US$70 a barrel to expand production, according to a survey conducted by the Dallas Federal Reserve Bank. Sure enough, nimble frackers have already responded by paring back drilling activities to conserve cash. The number of US onshore oil drilling rigs dropped by eight to 465 last week, the lowest since November 2021, according to energy services firm Baker Hughes. Crucially, drillers in the Permian Basin in West Texas and eastern New Mexico, which accounts for nearly half of US production, cut three rigs, bringing the total down to 279, also the lowest since November 2021. Crude production from new Permian wells, a measure of productivity, slightly improved in April, but that was largely offset by declines in other basins. Multiple indicators suggest activity is set to decelerate further. Importantly, Frac Spread Count, which measures the number of crews actively performing hydraulic fracturing, has seen a 28% annual drop to 186, according to energy consultancy Primary Vision, an indication that production could fall sharply in the coming months. Another measure to watch is drilled but uncompleted wells (DUCs), or partially completed wells that can start production quickly, offering operators flexibility to withhold production until market conditions improve. DUCs have risen by 11% since December 2024 to 975 in the Permian Basin. Down but not out While the latest data on shale drilling activity suggests US production will continue to slow, it is far from falling off a cliff. The US energy information administration reduced in May its forecasts for US production in 2025 and 2026 by around 100,000 bpd to 13.4 million bpd and 13.5 million bpd, respectively, compared with 13.2 million bpd last year. Production in the Permian Basin is forecast to average 6.51 million bpd in 2025, down from its previous estimate of 6.58 million bpd. However, that would still mark a significant increase from 6.3 million bpd in 2024. Opec+ may find it even harder to have a sustainable impact now than it did in 2014 as the US shale landscape is significantly different from a decade ago. True, 15 years of intensive oil and gas drilling have depleted a large chunk of the most profitable shale acreage. However, shale drillers have in recent years adopted much stricter spending discipline, focusing on returning value to shareholders in contrast with last decade's focus on growing production. Independent US oil and gas producers have so far reduced their planned 2025 spending commitments by an aggregate 4% to US$60 billion, while output is expected to remain largely flat, according to consultancy RBN Energy. Also, production today is concentrated in the hands of far fewer companies, such as Exxon Mobil and Chevron. These energy majors have developed highly efficient drilling techniques and boast strong balance sheets that leave them better equipped to withstand the Opec assault. Current oil prices are therefore likely to temporarily curb US production but not lead to the type of sharp deceleration seen in 2014. Opec+ will therefore need to deepen and extend its price war for many months if it seeks to fundamentally change the oil production balance of power.
Zawya
3 days ago
- Business
- Zawya
OPEC must squeeze US shale much more to win oil price war: Bousso
LONDON - Oil drillers in the U.S. shale heartland are slowing down operations, a sign that OPEC's high-stakes price war is starting to pay off, but Saudi Arabia will need to exert a lot more pain to make a lasting impact on market share. U.S. oil producers upended the global market in the early 2010s, as the innovative 'fracking' drilling technique allowed them to tap vast onshore shale formations. Consequently, the United States, long the world's top oil consumer, became its leading producer as of 2018. It currently pumps around 13.5 million barrels per day, around 13% of world supplies. The rising tide of U.S. oil has long irked the Organization of the Petroleum Exporting Countries, which has seen its market share steadily erode over the past two decades. Saudi Arabia, OPEC's de-facto leader, in 2014 sought to curb surging U.S. output by flooding the market with cheap oil. This effort bankrupted a number of shale producers, but it only temporarily paused the country's ascent as companies adapted to lower prices and the industry consolidated. PRICE WAR REDUX Riyadh and its allies, a group known as OPEC+, are now giving it another go. They surprised the market earlier this year by announcing that they would rapidly unwind 2.2 million bpd of production cuts introduced in 2024. The group is expected to announce further increases in production later this week. Benchmark U.S. oil prices have dropped by nearly a quarter since January to around $61 a barrel in response to OPEC+'s strategy as well as concerns over U.S. President Donald Trump's trade wars. At these prices, many shale wells are not profitable, as frackers require an oil price of between $61 and $70 a barrel to expand production, according to a survey conducted by the Dallas Federal Reserve Bank. And sure enough, nimble frackers have already responded by paring back drilling activities to conserve cash. The number of U.S. onshore oil drilling rigs dropped by eight to 465 last week, the lowest since November 2021, according to energy services firm Baker Hughes. Crucially, drillers in the Permian Basin in West Texas and eastern New Mexico, which accounts for nearly half of U.S. production, cut three rigs, bringing the total down to 279, also the lowest since November 2021. Crude production from new Permian wells, a measure of productivity, slightly improved in April, but that was largely offset by declines in other basins. And multiple indicators suggest activity is set to decelerate further. Importantly, Frac Spread Count, which measures the number of crews actively performing hydraulic fracturing, has seen a 28% annual drop to 186, according to energy consultancy Primary Vision, an indication that production could fall sharply in the coming months. Another measure to watch is drilled but uncompleted wells (DUCs), or partially completed wells that can start production quickly, offering operators flexibility to withhold production until market conditions improve. DUCs have risen by 11% since December 2024 to 975 in the Permian Basin. DOWN BUT NOT OUT While the latest data on shale drilling activity suggests U.S. production will continue to slow, it is far from falling off a cliff. The U.S. Energy Information Administration reduced in May its forecasts for U.S. production in 2025 and 2026 by around 100,000 bpd to 13.4 million bpd and 13.5 million bpd, respectively, compared with 13.2 million bpd last year. Production in the Permian Basin is forecast to average 6.51 million bpd in 2025, down from its previous estimate of 6.58 million bpd. But that would still mark a significant increase from 6.3 million bpd in 2024. OPEC+ may find it even harder to have a sustainable impact now than it did in 2014 as the U.S. shale landscape is significantly different from a decade ago. True, 15 years of intensive oil and gas drilling have depleted a large chunk of the most profitable shale acreage. However, shale drillers have in recent years adopted much stricter spending discipline, focusing on returning value to shareholders in contrast with last decade's focus on growing production. Independent U.S. oil and gas producers have so far reduced their planned 2025 spending commitments by an aggregate 4% to $60 billion, while output is expected to remain largely flat, according to consultancy RBN Energy. Also, production today is concentrated in the hands of far fewer companies, such as Exxon Mobil and Chevron. These energy majors have developed highly efficient drilling techniques and boast strong balance sheets that leave them better equipped to withstand the OPEC assault. Current oil prices are therefore likely to temporarily curb U.S. production but not lead to the type of sharp deceleration seen in 2014. OPEC+ will therefore need to deepen and extend its price war for many months if it seeks to fundamentally change the oil production balance of power. Want to receive my column in your inbox every Thursday, along with additional energy insights and trending stories? Sign up for my Power Up newsletter here.
Reuters
3 days ago
- Business
- Reuters
OPEC must squeeze US shale much more to win oil price war: Bousso
LONDON, May 29 - Oil drillers in the U.S. shale heartland are slowing down operations, a sign that OPEC's high-stakes price war is starting to pay off, but Saudi Arabia will need to exert a lot more pain to make a lasting impact on market share. U.S. oil producers upended the global market in the early 2010s, as the innovative 'fracking' drilling technique allowed them to tap vast onshore shale formations. Consequently, the United States, long the world's top oil consumer, became its leading producer as of 2018. It currently pumps around 13.5 million barrels per day, around 13% of world supplies. The rising tide of U.S. oil has long irked the Organization of the Petroleum Exporting Countries, which has seen its market share steadily erode over the past two decades. Saudi Arabia, OPEC's de-facto leader, in 2014 sought to curb surging U.S. output by flooding the market with cheap oil. This effort bankrupted a number of shale producers, but it only temporarily paused the country's ascent as companies adapted to lower prices and the industry consolidated. Riyadh and its allies, a group known as OPEC+, are now giving it another go. They surprised the market earlier this year by announcing that they would rapidly unwind 2.2 million bpd of production cuts introduced in 2024. The group is expected to announce further increases in production later this week. Benchmark U.S. oil prices have dropped by nearly a quarter since January to around $61 a barrel in response to OPEC+'s strategy as well as concerns over U.S. President Donald Trump's trade wars. At these prices, many shale wells are not profitable, as frackers require an oil price of between $61 and $70 a barrel to expand production, according to a survey conducted by the Dallas Federal Reserve Bank. And sure enough, nimble frackers have already responded by paring back drilling activities to conserve cash. The number of U.S. onshore oil drilling rigs dropped by eight to 465 last week, the lowest since November 2021, according to energy services firm Baker Hughes. Crucially, drillers in the Permian Basin in West Texas and eastern New Mexico, which accounts for nearly half of U.S. production, cut three rigs, bringing the total down to 279, also the lowest since November 2021. Crude production from new Permian wells, a measure of productivity, slightly improved in April, but that was largely offset by declines in other basins. And multiple indicators suggest activity is set to decelerate further. Importantly, Frac Spread Count, which measures the number of crews actively performing hydraulic fracturing, has seen a 28% annual drop to 186, according to energy consultancy Primary Vision, an indication that production could fall sharply in the coming months. Another measure to watch is drilled but uncompleted wells (DUCs), or partially completed wells that can start production quickly, offering operators flexibility to withhold production until market conditions improve. DUCs have risen by 11% since December 2024 to 975 in the Permian Basin. While the latest data on shale drilling activity suggests U.S. production will continue to slow, it is far from falling off a cliff. The U.S. Energy Information Administration reduced in May its forecasts for U.S. production in 2025 and 2026 by around 100,000 bpd to 13.4 million bpd and 13.5 million bpd, respectively, compared with 13.2 million bpd last year. Production in the Permian Basin is forecast to average 6.51 million bpd in 2025, down from its previous estimate of 6.58 million bpd. But that would still mark a significant increase from 6.3 million bpd in 2024. OPEC+ may find it even harder to have a sustainable impact now than it did in 2014 as the U.S. shale landscape is significantly different from a decade ago. True, 15 years of intensive oil and gas drilling have depleted a large chunk of the most profitable shale acreage. However, shale drillers have in recent years adopted much stricter spending discipline, focusing on returning value to shareholders in contrast with last decade's focus on growing production. Independent U.S. oil and gas producers have so far reduced their planned 2025 spending commitments by an aggregate 4% to $60 billion, while output is expected to remain largely flat, according to consultancy RBN Energy. Also, production today is concentrated in the hands of far fewer companies, such as Exxon Mobil and Chevron. These energy majors have developed highly efficient drilling techniques and boast strong balance sheets that leave them better equipped to withstand the OPEC assault. Current oil prices are therefore likely to temporarily curb U.S. production but not lead to the type of sharp deceleration seen in 2014. OPEC+ will therefore need to deepen and extend its price war for many months if it seeks to fundamentally change the oil production balance of power. Want to receive my column in your inbox every Thursday, along with additional energy insights and trending stories? Sign up for my Power Up newsletter here.
