American stockpiles took an unexpected jump this week, as did the value of the dollar.
It was a good week for the stock market, especially in the US and in early trading on Friday, Brent crude was trading around US$55 a barrel with WTI under US$53 a barrel.
While the OPEC, non-OPEC production cut agreement is holding up as we begin month-three of the deal, the calls for an extension of the agreement beyond mid-year are being heard.
A Reuters survey said overall compliance is currently at 94 percent for February, a figure that pleased the market. Output from Saudi Arabia fell further in February with the total two months of the year at around 744,000 fewer barrels a day.
JBC Energy says they see compliance from the 10 OPEC countries is currently at 89 percent.
The Russian Energy Minister, Alexander Novak, told Reuters his country had implemented their promised cuts.
When asked about the need for an extension, he said it was too early to tell. He said that each country was responsible for its own commitment to cut production and added that “companies in Russia voluntarily defined their own output plans for 2017” and said that Russia was taking full responsibility for its production cuts.
Russia is looking at a cut of 300,000 barrels a day in the first half of the year and output is already been curtailed by about 200,000 barrels in the first quarter, but the market is worried that it has now stalled. Novak said he was not surprised that American production was on the rise, possibly by as much as half a million barrels this year.
While domestic production is on the increase, American stockpiles are back at record highs, above 520 million barrels after an increase in supplies of 1.5 million barrels last week.
The Energy Information Administration said it still expects the oil price to stay above US$50 a barrel despite a growing rig count and additional production.
ExxonMobil’s CEO Darren Woods said the company is looking to boost its share of shale oil production by 20 percent annually in the next decade.
President Donald Trump addressed his first joint session of US Congress this week and the market responded positively to his more conciliatory and somewhat more “presidential” tone.
There was less of the fighting spirit we are all used to but little detail about solid future economic plans. Investors seemed to respond well and stock markets closed higher.
In a possible reverse of former President Obama’s efforts to mitigate climate change in the US, the Environmental Protection Agency has withdrawn an inquiry for strict regulations on methane emissions from oil and gas.
The focused efforts from OPEC and friends has certainly added a sense of stability to the market. Volatility is lower and the oil companies are beginning to look towards a brighter future.
The only concern now, at least in the short term, is the state of the global economy and the fear of overambitious American producers.