US drillers added 11-rigs to the number of oil and gas rigs this week, according to Baker Hughes, adding 9 active oil rigs and 1 active gas rig, with an addition of 1 miscellaneous rig.
Meanwhile, neighboring Canada lost 7 rigs for the week, after shedding hundreds rigs (seasonal effects) in the last couple of months.
Both the Brent and WTI benchmark were trading up on the day earlier on Friday, supported by the Iran nuclear sanctions issue that is set to come to a head on May 12, and falling production in Venezuela that is expected to continue as the country slips further into disarray.
U.S. President Donald Trump has one more to decide the fate of the sanctions against Iran, although it is largely expected that he will refuse to waive the sanctions-a theory that has in itself supported the price of oil this last month, with Brent briefly breaching beyond $75 to its highest price level since November 2014. Prices are expected to be volatile as we move closer to the deadline for the decision.
For Venezuela's part, while production is not expected to reclaim its previous levels, the presidential election in Venezuela scheduled for May 20 is yet another May decision that will impact already volatile prices. Related: Canada Oil Revenues Fall Despite Production Growth
West Texas Intermediate was trading up $0.35 (+0.51%) at $68.78 at 11:01pm EST. The Brent benchmark was trading up $0.29 (+0.39%) at $73.91.
US oil production rose again in the week ending April 27, reaching 10.619 million bpd-the increase in as many weeks-less than a 400,000 bpd off the 11.0 million bpd forecast that many predict for 2018.
At 8 minutes after the hour, WTI was trading up 2.05% at $69.83, with Brent trading up 1.87% at $74.93.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
Comments
While the US shale industry has boasted of higher initial production (IP) rates from their shale wells in recent years, there is some evidence that suggests those higher IP rates do not necessarily translate into larger gains in the total volume of oil and gas that is ultimately recovered. According to Rystand Energy, an independent Norwegian-based energy research and analysis outfit, a sample of wells in the rich Eagle Ford shale basin in Texas showed that higher IP rates in recent years were offset by steeper declines than before.
The global oil market is starting to realize these facts on the ground, hence the continued surge of oil prices despite the addition of new rigs. Oil prices will continue to surge this year probably reaching $80 a barrel underpinned by very positive oil market fundamentals, virtually re-balanced market and rising geopolitical concerns.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Meanwhile the higher prices are fantastic for renewable energy. It gives them a window to be competitive while they continue to rapidly reduce their costs. They will be able to grow market share and reduce their costs. The world has changed and Saudi Arabia w OPEC/Russia have not caught up. They should have been making the changes they are rushing to make now at least 10 years ago, and now their window is short. The price of $85 to $100 a barrel will cause a jump in supply of non-OPEC especially US oil and gas, a jump in market share for renewables, and people will look for alternatives faster than in the past because they know they exist. It will also begin to hit demand. That data won't show up at first, but when it does it will surprise everybody. Saudi Arabia with OPEC/Russia are doing a foolish think pushing prices this high, but the result will be good for the USA and world medium and long term.