I am a novice and have hardly any competency to trade on the dynamics of oil trade, It is a business controlled by seven sisters and price is determined by super powers by crating geopolitical crisis.
As regards to containing oil glut I posted two blogs: 1) US shale producers to gulp Saudi market share of oil and 2) Curtailing oil production ‘an agreement of thugs to rip off consumers’. Both of my points have got credence by persistent increase in oil prices and number of active rigs in the US and further impetus has been provided by the intentions of US President for imposing fresh sanctions on Iran.
According to a Reuters report US companies added oil rigs for a 13th week in the last 14, extending a nine-month recovery. They are taking advantage of crude prices that have held mostly above US$50 a barrel since OPEC agreed to cut supplies in November 2016.
Drillers added 17 oil rigs in the week ended on 3rd February taking the total count up to 583, the most since October 2015, energy services firm Baker Hughes Inc said on Friday. During the same week a year ago, there were 467 active oil rigs.
Since crude prices first topped $50 a barrel in May, after recovering from 13-year lows last February 2016, drillers have added a total of 267 oil rigs in 32 of the past 36 weeks, the biggest recovery in rigs since a global oil glut crushed the market in mid 2014.
Analysts expect the US energy firms to boost spending on drilling and pump more oil and natural gas from shale fields in coming years now that energy prices are projected to keep climbing.
According to Reuters report quoting analysts at Simmons & Co, energy specialists at US investment bank Piper Jaffray, this week forecast the total oil and gas rig count would average 795 in 2017, 911 in 2018 and 1,022 in 2019. Most wells produce both oil and gas.
Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 31 exploration and production (E&P) companies planned to increase spending by an average of 36 percent in 2017 over 2016. That spending increase in 2017 followed an estimated 45 percent decline in 2016 and a 37 percent decline in 2015, Cowen said according to the 65 E&P companies it tracks.
In such a scenario US-Saudi alliance wants export of Iran to come down, by making it a target once again accusing it of any violation, real or part of any diabolic thinking, miles away from the ground realities. If anyone disagrees with me should refer back to three decades of impositions of economic sanctions on Iran and attack on Iraq for having weapon of mass destruction.