OPEC Still Overproducing: Scapegoats US Shale

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OPEC Still Overproducing: Scapegoats US Shale

"Iran is taking aim at 4 million barrels per day, which would be above its production cap".

Increased shale production will transform the USA into one of the world's top oil exporters in just a few years, according to a new forecast by the consultancy PIRA Energy Group.

OPEC's oil production increased in June, driven by production output increases from Libya and Nigeria along with Saudi Arabia.

Meanwhile, as a first step to controlling what OPEC can control, namely supply, OPEC chief Barkindo said Libya and Nigeria are expected to send representatives to OPEC, non-OPEC Joint Technical Committee meeting in Russian Federation on July 22, where according to some, they will be asked to also enforce production caps on their output, joining the rest of OPEC in limiting supply. Distillate inventories rose again this week, this time by 2.079 million barrels compared to analysts forecast a 1.1-million-barel build.

USA crude imports fell last week by 282,000 bbl/d, while exports rose to 918,000 bbl/d from 768,000 bbl/d. Whopping 6.3 million barrels decline in the United States crude oil inventories as reported by the EIA on Thursday failed to lift the prices beyond an hour. Federal Reserve Chairwoman Janet Yellen said in prepared remarks. Global oil demand is poised to increase to 99.2 mln bps by 2021, the EIA said, and to 109.4 mln bpd by 2040.

Exxon Mobil Corp. (NYSE: XOM) traded up about 0.3%, at $80.83 in a 52-week range of $79.26 to $95.55.

Chevron Corp. (NYSE: CVX) traded up almost 0.5%, at $103.58 in a 52-week range of $97.53 to $119.00. BP (BP) jumped 1.8%. S&P has already downgraded Exxon Mobil, Royal Dutch Shell, Total, BP.

Venezuela's direct communication with OPEC indicated a production decline of 33,000 barrels per day.

Saudi Arabia told the Organization of the Petroleum Exporting Countries its oil production in June rose to 10.07 million bpd, slightly above its OPEC target, mainly due to an increase in domestic crude burning for power during summer. Last month, EIA forecast US drillers would produce 10 million barrels a day in 2018. Output from the repaired terminal is expected to raise the country's output to at least 2 million bpd.

But experts warn that shale won't be enough to make up for lack of investment in conventional drilling. During the next two to three years, this process is unlikely to cause any problems with non-Opec growth next year alone being enough to meet rising demand.

On Monday, Saudi Aramco CEO Amin Nasser echoed that sentiment at a conference in Istanbul, saying that shale and other energy resources, while important, weren't enough to replace conventional oil and gas operations, according to Reuters.

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