Few Signs of Recovery for U.S. Oil Production, OPEC Says -- Update
By David Hodari
American oil production is set to drop again this year, with the
shale industry's output showing few signs of recovery despite a
broader pickup in economic activity, the Organization of the
Petroleum Exporting Countries said Tuesday.
In its closely watched monthly market report, OPEC cut its
forecast for the amount it expects production from its noncartel
counterparts to increase in 2021 by 200,000 barrels a day to
Canada, Norway, Brazil, and China will drive that overall
increase, but persistently low capital expenditure and the
unexpected winter storm that Texas suffered in February mean U.S.
supply is expected to fall by 100,000 barrels a day this year after
dropping 800,000 barrels a day last year, the cartel said.
Despite its forecast for a rise in supply from outside the
cartel this year, OPEC said in its report that "uncertainties
persist particularly with regard to levels of investment which is
expected to determine the non-OPEC supply outlook for the years to
Oil prices swung between small gains and losses before closing
slightly higher on Tuesday as traders weighed signals that the
Colonial pipeline -- hit last week by a ransomware attack that
threatened its ability to supply oil products to the U.S. East
Coast -- could have most or all of its regular service restored by
the end of this week.
Brent crude oil, the global benchmark, ended the day up 0.3% at
$68.55 a barrel and West Texas Intermediate futures, the U.S.
benchmark, added 0.6% to $65.28 a barrel.
In its report, OPEC left unchanged its forecast for global oil
demand in 2021. The cartel estimates consumption will rise by 6
million barrels a day this year to average 96.5 million barrels a
day, leaving demand 3.5% lower than it was before coronavirus
pandemic restrictions shut factories, grounded planes and kept
people at home.
The world's post-pandemic economic recovery, which has also
prompted a rebound in oil demand, has varied in recent months due
to governments' differing levels of success in keeping coronavirus
case numbers at bay and rolling out vaccination programs.
While India and Brazil have suffered a resurgence of cases in
recent months, the U.S., China and parts of Europe such as the U.K.
have all succeeded in bringing infections under control and lifting
travel restrictions. Despite that fast-changing and uncertain
backdrop, OPEC raised its forecast for global economic growth in
2021 by 0.1 percentage point to 5.5% after a 3.5% contraction in
OPEC and its allies agreed early last month to boost their
collective production by more than 2 million barrels a day over
May, June and July as they wagered on resurgent demand as the
pandemic ebbs in parts of the world.
Secondary data cited by OPEC show that production from Saudi
Arabia and Nigeria rose in advance of the easing of those
restrictions, while Libyan production slipped after disputes over
budget payments prompted the country's national oil company to
declare force majeure and cut production.
According to the data, Iranian supply continued to rise,
climbing 73,000 barrels a day to 2.4 million barrels a day, with
growing Chinese imports potentially threatening the West's leverage
in talks over reviving a nuclear deal with Tehran.
Meanwhile, front-month Nymex natural gas for June delivery
gained 2.30 cents per million British thermal units, or 0.8%, to
$2.9550 per million British thermal units today.
Write to David Hodari at David.Hodari@dowjones.com
(END) Dow Jones Newswires
May 11, 2021 17:27 ET (21:27 GMT)
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