A Rare Fall in US Rig Count: Are Shale Drillers Slowing?

A Rare Fall in US Rig Count: Are Shale Drillers Slowing?

With the balance sheet now on a firmer footing coupled with an attractive mix of production assets and higher oil prices hedged in for 2017, the risk/reward case for Tullow is becoming more skewed to the upside.

Libya's oil production has climbed to more than 1 million barrels a day for the first time in four years just as oil prices capped the longest run of gains in six months after USA shale explorers paused a record drilling expansion.

US West Texas Intermediate (WTI) crude futures was up by 15 cents, or 0.3%, to United States dollars 46.19 per barrel after a more than 7% gain last week.

At the same time, Goldman says that oil prices could see some gains this year, potentially having recently bottomed out in the low-$40s.

He commented, 'Crude oil prices fell all the way back to their pre-production cut lows of November a year ago over the past month.




"For example, tighter monetary policy is a cyclical headwind for oil, while a secular demand rotation into liquid petroleum gases and out of gasoline/diesel will remove support from WTI crude oil prices".

The cartel's output in June rose by 280,000 barrels per day (bpd) to 32.72 million bpd, according to a survey carried out by Reuters. Trading volume was low ahead of the U.S. Independence Day holiday weekend. This incredibly fast reaction time compares to 3 to 10 year cycles for most non-shale non-Opec projects. The pressure on the prices arising from this resolved issue continues to remain and there is still concern about how it will impact the prices here in the coming weeks and months. That makes Venezuela the third largest supplier of crude to the USA, after Canada's 3.556 million bpd and Saudi Arabia's 1.02 million bpd. Imports were at 8.016 million barrels per day, up 140,000 barrels per day.

Plus, Nigerian exports are expected to rise further in August to reach at least 2 million bpd, a 17-month high; meanwhile, Libya's output has now exceeded 1 million bpd, a four-year high.

Experts also believe that there is a clear risk that inventory normalization will not take place until the end of March next year when the OPEC cut will come into force.

That news is also "keeping the market in check", said Ole Hansen, a commodities strategist at Saxo Bank. The increased production in the US and an increase in the numbers of operating rigs remains the biggest of concerns for the oil bulls. It's had an average price of $42.30, a high price of $46.20 and a low price of $35.60.

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