Oil at one-week high on leaner supply, OPEC warns on tight-oil output
WTI crude is up 95-cents to a one week high of $82.37 today after hitting a two-year low of $79.44 on Monday.
OPEC secretary-general Abdalla Salem el-Badri warned today that half of tight oil projects (like US fracking) need prices between $90-$100 for economic viability and that was the headline on most reports but he also said something that was very telling.
Mr. el-Badri said, however, that the impact of lower oil prices would start to be felt only next year as shale-producing companies have hedged themselves against a price drop.
OPEC’s El-Badri
What happened in the oil price fall to $80 from $107 is that shale producers were scrambling to hedge and did so en masse. That added constant selling pressure to the market and caused a cascading effect.
Looking ahead, US oil inventories are due at 10:30 am ET (1430 GMT) and expected to increase by 3130K barrels. There’s a downside in that forecast after API numbers yesterday showed a build of 3.2m barrels compared to 3.4m expected.