by Daniel J. Graeber
Washington (UPI) Oct 11, 2017
The price for crude oil next year should be around the so-called Goldilocks number for shale oil drillers in the United States, OPEC economists said.
The Goldilocks scenario refers to a price point that's not so high that it encourages a strong drive in crude oil exploration and production, but not low enough to curtail capital spending and operations.
Economists with the Organization of Petroleum Exporting Countries said in their monthly market report for October that the price for West Texas Intermediate, the U.S. benchmark for the price of oil, could be in a range between $50 per barrel and $55 per barrel for 2018.
"A rise above that level would encourage U.S. oil producers to expand their drilling activities, otherwise the lower prices could lead to a reduction in their capital expenditures," the report read.
The U.S. Energy Information Administration reported the four-week average for total crude oil production as of Sept. 29 at 9.5 million barrels per day, an 11.8 increase from the same period in 2017. EIA said it expected a full-year production average of 9.3 million barrels per day in 2017 and 9.8 million barrels per day next year, "which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million barrels per day set in 1970."
A September report from consultant group Wood Mackenzie said capital discipline and operational efficiency have led to resilience for non-OPEC producers. OPEC economists, however, said well productivity in key U.S. shale basins, particularly the Eagle Ford and Permian reservoirs in the south, are "flat-to-lower." Drilling efficiency, meanwhile, dropped 20 percent from third quarter 2016 and service costs are up 10 percent year-to-date.
Total non-OPEC production is expected to increase next year, primarily because operators are dusting off projects that were shelved at the height of the market collapse, but there may be headwinds for U.S. shale if the price of oil turns lower.
"Lower prices are beginning to weigh on U.S. shale oil activity as concerns mount that aggressive development could lead to output declines," the market report read.
WTI was priced near $51 per barrel early Wednesday.
Washington (UPI) Oct 10, 2017
Norwegian energy major Statoil will start using liquefied natural gas as a maritime fuel at the port of Rotterdam by the next decade, a French gas company said. French energy company ENGIE and its Japanese consortium partners said they were selected by Statoil to supply LNG as fuel for four crude shuttle tankers at the Norwegian port of Rotterdam. "The four planned dual fuel vess ... read more
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