Oil and gas

Oil industry executives and analysts said on Monday that the sudden oil production cuts by the “OPEC+” group would lead to increased demand for US oil in Europe and Asia and encourage some other producers to increase output.

Yesterday, on Sunday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, in an alliance known as “OPEC+”, pledged to cut production by 1.16 million barrels per day starting next month. Oil prices continued to rise more than 6% today Monday, with US crude futures hitting $80 a barrel.

Curbs from Middle East producers are estimated to mean an average of 2.3 million barrels less in markets in the second half of 2023, estimates Matt Hagerty, senior director at energy consultancy PTU Analytics.

“We could see an additional 200,000 barrels from U.S. producers by the end of the year,” said Jörg Leon, Rystad Energy’s senior vice president of market research. New production is expected to be exported to Europe.

The U.S. produced nearly 12.5 million barrels per day in January, according to the latest government data. Energy technology company Inversos estimates production in America’s largest shale basin will increase by 400,000 barrels a day this year, half of its 2019 level before the coronavirus pandemic.

(Toll City Exploration), Mike Ostman CEO, listed companies will maintain production levels even if crude oil futures contracts above $ 80, but private companies will have an incentive to increase activity.

“It makes new investment a little more attractive,” he added.

Attention America

According to a survey by the Dallas Federal Reserve, oil and gas activity in the U.S. stagnated last quarter and expectations from drilling companies turned negative. Increased operating costs, higher interest rates and lower crude oil and natural gas prices have reduced cash flow.

Market participants said the OPEC cuts would boost demand for US medium and sour crude as Middle East crude prices remain high.

Asia and Europe are already demanding more U.S. crude after Russia’s invasion of Ukraine changed the map of oil flows. (Vortexa) data showed U.S. seaborne crude exports last month were 4.74 million barrels per day, the highest monthly total since at least January 2020.

“This growth should bode well for already strong US crude oil exports and increased Canadian exports of medium and sour crudes from the US, which is already short on sour crudes in the global market,” said Rohit Rathod, senior oil market analyst at Fortesca. .

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