Olivier and Mann – Oil prices remained largely steady but prospects of more U.S. drilling is causing anxiety at a time when OPEC and other leading producers are attempting to bring their production levels down to support prices.
Prices above the psychological $50 level have sent the number of working U.S. rigs to the highest level for over 2 years. The price has been above $50 since the agreement was made in December to reduce output.
The oil market was relatively quiet in Asia due to the celebrations for the Lunar New Year.
The March delivery of London Brent crude fell 28 cents to $55.24 per barrel, following its decline of 72 cents last weekend.
The March delivery of NYMEX crude fell 27 cents to $52.90 per barrel.
Last week, 15 oil and gas rigs went into operation in the U.S., the biggest number of entrants since the last part of 2015, bringing the total to 566 and the number is expected to continue rising by about 7 rigs per week.
The Middle East oil cartel and other major oil exporting countries agreed to curb production by about 1.8 million barrels per day (BPD) from January to June of 2017 in an effort to reduce two-years of overproduction.
According to some economists, the present supply and demand projections indicate that the oil industry has already reached optimum performance.
While the U.S. oil production keeps on rising, the International Energy Agency (IEA) thinks that U.S. production will be at 320,000 BPD on average this year.
IEA expects the oil cuts being made by the cartel will surpass America’s oil production increases and will rapidly shrink the overall oil glut that has accumulated over the recent few years.
Iran’s oil minister said that he expects the price per barrel to hover around $55 over the course of the year.