Oil prices rise on ongoing OPEC-led supply cuts

Khalid al Falih speaks during a news conference in Riyadh

Oil prices rise on ongoing OPEC-led supply cuts

High drilling activity past year resulted in a more than two million barrels per day rise in production, to 12.1 million bpd reached this February, making the United States the world's biggest producer of crude oil ahead of Russian Federation and Saudi Arabia.

Refiners around the world are expected to add 9 million bpd of new capacity through 2024, the Paris-based agency said in its report, noting that China is expected to overtake the United States as the world's leader in installed refining capacity. Furthermore, the recent price action and the market's ability to regain its composure after recent concerns over demand drove prices lower, suggest that any further tightening in the physical crude balance could lead to a new high for the year over the near-term.

Crude output in the United States will rise almost 2.8 million bpd, growing to 13.7 million bpd in 2024 from just under 11 million bpd in 2018, the IEA said.

Oil prices have been receiving broad support this year from supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russian Federation aimed at tightening markets.

Oil prices rose on Monday, lifted by comments from Saudi oil minister Khalid al-Falih that an end to OPEC-led supply cuts was unlikely before June and a report showing a fall US drilling activity.

"Annual gains will boost the United States to levels never seen in any country, in excess of maximum capacity in both Russian Federation and Saudi Arabia", said the IEA in its five-year. The so-called OPEC+ group began a new round of oil supply cuts in 2019 to support prices.

"The second wave of the US shale revolution is coming", IEA Executive Director Fatih Birol said in a statement, as cited by CNBC.

US crude oil output will rise almost 2.8 million bpd, growing to 13.7 million bpd in 2024 from an average of just under 11 million bpd in 2018, the IEA said, making the United States by far the biggest oil producer in the world. "The second wave of shale production growth is coming".

US crude oil output will rise almost 2.8 million bpd, growing to 13.7 million bpd in 2024 from an average of just under 11 million bpd in 2018, the IEA said, making the United States by far the biggest oil producer in the world. Goldman Sachs has said oil demand could peak by 2024 under some circumstances.

"As a result, the United States will be in prime position as a supplier of light types of crude oil that are in growing demand".

"Market management by producers is likely to remain necessary for some time given the outlook for the call on OPEC crude", the report said.

The IEA estimates in today's report that demand for high sulfur fuel oil (HSFO), the main vessel fuel since the 1960s, will plunge to 1.4 million bpd from 3.5 million bpd in just one year, and that there will be 4,000 scrubbers installed on large vessels by the end of 2020, consuming 700,000 bpd of fuel oil.

OPEC's share of the cuts is 800,000 bpd, to be delivered by 11 members - all except Iran, Libya and Venezuela, which are exempt.

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