Prices Fall To 6-Year Low For U.S. Oil
2015/4/17 9:57:36 Source：The New York Times
Oil prices fell to six-year lows on Monday in the face of concerns that a glut in the United States was outpacing already-brimming storage facilities.
Additionally, the Organization of the Petroleum Exporting Countries published a report suggesting that the cartel remained reluctant to intervene to prop up prices.
The direction of oil prices, which had risen sharply from January lows, has fallen back in recent days. Traders are now focused on the second quarter of the year, when demand for oil is traditionally weak because of the end of winter and scheduled refinery shutdowns for maintenance.
On Monday, the price of West Texas Intermediate crude, the main United States benchmark, fell about 2 percent to about $44 a barrel, a six-year low, while Brent crude, the international benchmark, fell by about 2 percent to about $53 a barrel.
Oil markets continue to focus on OPEC because its members could quickly alter the markets’ balance by cutting production. But while some members, including Nigeria and Venezuela, would like to see cuts, Saudi Arabia and its Gulf allies show little inclination to change the policy they agreed to in the fall: Protect market share regardless of what happens to prices.
While OPEC’s competence at managing the market was always much in question, the organization’s decision to stay on the sidelines has opened the way for volatile price movements.
In the view of market participants, OPEC’s role as the swing producer has moved to the United States and, in particular, to the producers of oil from shale rock. These companies have helped increase American production by more than four million barrels a day since 2009, far more than the combined increases in the rest of the world.
Many analysts say that with low prices discouraging investment in drilling, production growth in the United States will level off and even begin to decline. But when this change will happen is a matter of speculation.
A group of oil companies working in Texas and North Dakota and elsewhere is far different from the gatherings of OPEC oil ministers that decide whether to cut or increase supply at meetings in Vienna.
“A new math for oil has emerged,” said Bhushan Bahree, an analyst at IHS Energy, a business information company in Washington. “The new math is the mix of variables that shape the pace and level of U.S. oil production as well as investment in high-cost sources of supply.”
Mr. Bahree said that while the market was trying to find a new equilibrium, “it is likely to flounder in the search for a new price range.”
OPEC made its own guess about when production might begin declining in the United States in its monthly oil report, published on Monday. Asserting that the output of a typical shale well can fall by 60 percent annually and noting the continued decline in the number of drilling rigs operating in the United States, OPEC suggested that “a drop in production can be expected to follow, possibly by late 2015.”
While that might seem like encouraging news to oil producers, it also means that OPEC, or at least Saudi Arabia, may be in no hurry to cut production at the group’s next meeting, in June.
The Saudis argue that over time, economics will work in their favor because their oil costs a few dollars a barrel to produce, while oil from shale, deepwater wells and Canadian oil sands is much more expensive. The Saudis also contend that any move to prop up prices now will encourage more investment in production in the United States and elsewhere.
In a speech on Sunday in Doha, Qatar, Ibrahim al-Muhanna, an adviser to the Saudi oil minister, also seemed to counsel patience. “We have a long-term view, and we do not make knee-jerk reactions to headlines,” he said, according to a text of his speech.
Mr. al-Muhanna said he was confident that demand from a strong global economy would prove sufficient to soak up supplies and that “prices will firm up.”
OPEC’s report on Monday was less sanguine. The group forecast that demand for its crude would average about 29.2 million barrels a day in 2015. That is about 800,000 barrels a day less than OPEC said it was producing in February.
