Huawei Technologies will immediately lose access to updates to the Android operating system, a source close the matter told Reuters.Technologyread more
Huawei claims it has developed its own operating system for smartphones and laptops for "extenuating circumstances."Technologyread more
Trump's threat, posted on Twitter, comes amid rising international tensions in the Middle East as the U.S. has dispatched a carrier strike group and bomber task force to the...Politicsread more
The latest crisis in the uneasy French-German relationship was accelerated by Trump's decision to stop Germany's comfortable and decades-old free-riding on trade and security...Europe Politicsread more
While some fans of the long-running "Game of Thrones" felt satisfied by the show's final bow, others were quick to express their displeasure with how events unfolded.Entertainmentread more
Stocks in Asia were mostly higher on Monday amid rising tensions between the U.S. and China.Asia Marketsread more
Current geopolitical tensions are making it harder and harder for oil-producing nations to make decisions that will help stabilize crude prices, Russian Energy Minister...Oilread more
Russian Energy Minister Alexander Novak said there were different options available for OPEC and its oil-producing allies in the second half of 2019, including a possible...Oilread more
The Australian Electoral Commission (AEC) on Monday said Morrison's coalition has won 76 seats in Australia's parliament, which is comprised of 151 elected lawmakers.Electionsread more
U.S. President Donald Trump said his tariffs on Chinese goods are causing companies to move production out of China to Vietnam and other countries in Asia, and added that any...World Politicsread more
SoftBank founder Masayoshi Son speaks in futuristic terms about his company, but the success of his late-stage VC fund is still unknown.Technologyread more
OPEC, Russia and other major producers could help drive oil prices back to $60 per barrel or more with a new production deal, but that would also be a green light for U.S. shale drillers.
At $50, and even more so at $60, U.S. oil drillers can profit on a much wider group of drilling sites. Analysts say a new deal expected from OPEC and other producers could speed up a rebalancing of the market, but the wave of new U.S. shale wells would also unleash enough new oil to cap OPEC's price gains.
Energy ministers from Russia and Saudi Arabia this week said they would recommend that other producers agree to an extended nine-month deal, instead of the six months or less that was expected by markets. The producers have agreed to hold 1.8 million barrels a day off the market. Oil jumped on the news, with West Texas Intermediate crude edging back toward the psychological $50 per barrel level Tuesday and Brent futures just over $52.
Many analysts expect to see $60 oil by the end of the year, but the gains are not expected to spike much higher.
"Basically U.S. supply is coming on faster than we anticipated. Now you have a higher inventory level to begin with, and a slower decline. That means in our view, prices are likely to be lower on average," said Francisco Blanch, global head of commodities and derivatives research at Bank of America Merrill Lynch.
Blanch said he expects Brent, the international benchmark to average $54 per barrel this year from an average $61 per barrel. He recently cut his forecast. For 2018, he does not see much of an increase, and he sees Brent at $56 per barrel, versus his previous forecast of an average $65.
Ed Morse, Citigroup's global head of commodities research, said he sees a strong chance of OPEC and the other producers unveiling a plan to cut output even deeper than the current 1.8 million barrels a day. He said the fact they signaled a longer time frame for the production deal suggests they could be discussing a bigger cut, and he sees a 60 to 70 percent chance they agree to a deeper cut.
"I think this market will rebalance itself very quickly. The extension alone should result in deeper cuts," he said. Morse said the market will see deeper cuts as an "invitation for cheating" and "a sign of desperation." He said the rebalancing is already underway, but he may have lowered his price forecast if it were not for the fact that he expects the production cuts to be deeper.
Blanch said he doesn't expect Russia or OPEC producers to cut back more. "I think it's pretty risky to deepen the cuts when they'll be losing market share to shale," he said. The U.S. is the world's third-largest oil producer, after Saudi Arabia and Russia.
"It feels to me that Saudi, Russia, and even the U.S., everyone needs $60 oil. The problem is you can't have the quantities and the prices," he said.
Morse said he projects Brent prices could reach $65 per barrel in the fourth quarter, and WTI somewhat less at $62 but he does not expect high prices to hold, and could be averaging in the $50s in the second half of 2018.
"We don't think U.S. production is going to stop the rebalancing of the market this year," Morse said, adding he expects U.S. production to grow by 800,000 barrels a day this year. "It's not enough to counter the cuts that are in place, particularly if they're being extended."
"We think next year will be more problematic," Morse said. He expects shale drilling to accelerate and U.S. shale alone could meet the new demand in global growth.
Even with the recent dip in oil prices, U.S. drillers have been adding wells. Nine were added for the week ended May 12, bringing the total count up to 712, double year-ago levels and the most since April 2015, according to Baker Hughes.
IHS Markit expects U.S. shale to grow by 900,000 barrels a day this year, and by the end of this year or early next year the U.S. will be producing record amounts of oil. The government reported that U.S. production reached 9.3 million barrels a day the week before last.
"You can certainly say a lot of shale today will be competitive between $40 and $50 a barrel. The question mark is what's going to happen to costs. We do think the costs this year in the Permian will go up 15 to 20 percent," said Daniel Yergin, vice chairman of IHS. "Rising costs will temper activity somewhat."
Yergin said shale is now medium cost production, versus high cost as recently as 2014.
The Permian in West Texas is currently most active, but more drilling could open up Eagle Ford in Texas or Bakken in North Dakota as prices rise.
"Other plays still remain on the sidelines in this $50 environment. When we were growing at a million barrels in the U.S., it wasn't Permian. It was Bakken and Eagle Ford," said Helima Croft, head of global commodities strategy at RBC. "The other thing about shale is it has a very high decline rate. The shale did come back stronger. Rigs are returning and for now it remains largely a Permian story."
Analysts have expected the market to get a lift from the summer driving season, and so far U.S. gasoline demand has been softer than expected. However, that could change and the market should see higher prices this summer .
"We expected big stock drawdowns in the second half and we still expected big stock draws in the second half," said Michael Wittner, global head of oil research at Societe Generale. "We think we get to around $60 [WTI] in the fourth quarter. ... There may be a little downside on the fact that draws are happening more slowly than we thought."
He said U.S. shale's response is something that Russia and Saudi Arabia have considered when working out a new deal. "It's something they've been thinking about — these two countries, and others — all along. They knew they needed to support prices but then the U.S. producers would see that and there would be an investment and supply response. The bottom line — these two countries are acting in their own self-interest. Their own self interest is higher prices , and their own self-interests coincide," he said.