...

Oil market can face new correction in near-term

Oil&Gas Materials 11 December 2018 15:04 (UTC +04:00)

Baku, Azerbaijan, Dec.11

By Leman Zeynalova – Trend:

The oil market can face a new correction in the near-term due to the increased oil production by the US, Trend reports citing the Gas Exporting Countries Forum (GECF).

“The expected rise in US supply coupled with a half-year waiver on oil import restrictions from Iran will still impact the oil price in 2019, but should still keep prices high enough to support rising tight oil production for some time,” said the 2018 Global Gas Outlook released by GECF. “ Thus, in the near-term, oil output growth in the US will likely put increased pressure on the market and cause a new market correction, albeit at a more modest scale than in 2014.

The developments in Venezuela raised the price to over $80 per barrel, which is expected to trigger a significant increase in US unconventional oil production in 2019-2020, according to GECF.

The report said that on the demand side, there is a downside risk for 2019 posed by tensions in the US-China standoff on trade and security.

“Structurally, in the long-term OPEC is still assumed to be the swing producer, as the outlook for US tight oil has been revised up by an average of 1.5 million barrels per day (mb/d) in 2018-2020 and an average of 1.6 mb/d in 2021-2040, despite the forecast price decrease,” said GECF.

It should be noted that the costs of extraction projects are still falling globally: the marginal cost for US tight oil decreased to $50-60 per barrel, while in 2015, the majority of the projects were in $70-80 per barrel range, according to the report.

---

Follow the author on Twitter: @Lyaman_Zeyn

Tags:
Latest

Latest