for Low Oil Prices
Venezuela’s current state of affairs is a prime example of why it’s important for economies of both producers and consumers to reduce dependence on oil. The meltdown in Caracas is a precarious situation for the U.S., given that Venezuela is its number three crude oil supplier.
Despite constant chatter of rebalancing, oil prices have been weakening, and OPEC has itself to blame for causing market uncertainty and instability.
Algeria's president has called for the country to combat the “hegemony of fuel” in light of recent economic devastation.
Despite continued rapid growth in U.S. shale, the global oil market could see price spikes and increased volatility at the beginning of next decade.
Nothing will change materially in the oil market until there’s a significant stock draw, a development that appears doubtful, which could ultimately force OPEC to change strategy once again.
After two years of seeing spending contract, the oil industry is poised to boost capex in 2017, but some warn that may not be enough to keep a shortfall from occurring in the future.
U.S. independent shale companies are starting to step up their spending plans, eyeing a swift return to the shale patch as oil prices rise. Many have revised their capex upward, added rigs, and hedged production forward.
In just the past two weeks since OPEC announced it plans to cut output, the cartel has significantly altered market sentiment and shifted the oil market outlook for next year.
A major consultancy says that the oil market will still take longer to rebalance than many analysts had reckoned because of supply-side trends both in OPEC and outside the group. A slew of new non-OPEC fields will ramp up to increase the global crude oversupply to a massive 1.8 mbd for 1H 2017.
Given the dire straits of OPEC countries’ fiscal situations, the cartel may ultimately take action at its meeting on November 30 to lift prices, a move that would hurt consumer countries. But a production cut isn't a forgone conclusion.