• Terry Bell's Inside Labour

    The PIC, which holds nearly R2trn of workers’ pension funds, needs to come clean or face legal action.

  • Ian Mann's book review

    Both giants and SMEs need to be prepared for the 15 disruptive forces that are driving change.

  • Redeem yourself, Gerrie!

    In joining AfriForum, Gerrie Nel has moved out of the reputational frying pan into the fire, says Solly Moeng.

Loading...

US oil output to grow again this year - OPEC

May 14 2018 13:12

Paris - Booming oil output in the United States - which has threatened to derail other producers' efforts to drive up crude prices - looks set to expand strongly again this year, OPEC said on Monday.

But rising inflation and possible trade restrictions could throw a spanner in the works for US producers in the longer term, the Organisation of Petroleum Exporting Countries said in a report.

The US is not a member of OPEC which accounts for more than 40% of the global oil market.

But booming output of US shale producers - eager to cash in on a rally in oil prices since late last year - has proven a headache for combined efforts by both OPEC members and non-members to cut back production to combat a global oil glut.

While those efforts have indeed succeeded in pushing up prices in recent months, rising crude prices have at the same time made it more attractive for shale producers - whose overheads are lower than the oil majors - to ramp up output.

OPEC has repeatedly warned that booming US shale production could jeopardise the delicate balance that the overall market has managed to reach.

In its latest monthly oil market report, OPEC upgraded its forecast for non-OPEC output and said that the US would account for the largest share of the projected increase.

Following a contraction in 2016, "non-OPEC oil supply has seen a recovery in 2017 and 2018... This has been on the back of improving oil market conditions and rising oil prices," the report said.

Nevertheless, it was "evident that uncertainties remain as to the forecast pace of growth of non-OPEC supply for the remainder of the year," the cartel cautioned.

The performance of non-OPEC supply in 2018 would depend on many factors, it said.

"The continued strong development of the world economy could lead to rising inflation, and, along with potential trade restrictions, would impact oil production costs."

In addition, fast-growing production in the US was "increasingly faced with costly logistical constraints in terms of outtake capacity from land-locked production sites," OPEC said.

US producers' capital spending plans could also be hit by pressure from shareholders demanding capital discipline and a return on their investments, it said.

OPEC said that geopolitical developments "will also continue to impact global oil supply developments in the months ahead," OPEC said.

"Despite the large uncertainties prevailing in key market fundamentals, OPEC, as always, stands ready to support oil market stability, together with non-OPEC oil producing nations," the cartel said.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

opec  |  us  |  economy  |  oil
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Have you considered your options for retirement?

Previous results · Suggest a vote

Loading...