Stephen Brennock, an analyst at PVM Oil Associates Ltd.in London, said: "A further pillar of price support came as the relentless surge in US drilling activity took a break".
Several banks in the last week cut their oil price projections for the rest of the year, with analysts from Bank of America-Merrill Lynch on Friday saying the "the much trumpeted OPEC output deal has been a complete flop". It is also better to keep an eye on the oil inventory data to ensure that the non-OPEC members do not do anything substantial and try and reverse the oil prices by building up a lot of inventory. The Opec believes that deal will bring inventories back in line with upper range of five-year averages. Robust appetite from Japanese and South Korean buyers could help soak up excess supplies.
There were, therefore, further concerns over increased output with increased production in Libya and Nigeria. Its year high is $54.45. Shale oil producers have intensified technological research and with generous incentives including hedges continued to give signals and threats that their production cost would soon have a breakeven to cripple conventional oil produced by OPEC. The IEA sees Non-Opec supply growth of 1.5 mbpd next year compared to demand growth of 1.4 mbpd. Meanwhile, the U.S. rig count fell last week for the first time in about five months. In the last week, there was a decrease of 2 operating rigs in the United States, pushing the total number to 756, the highest since April 2015.
Crude oil booked a small loss today following a seven-day rally as rising production from members of the Organisation of the Petroleum Exporting Countries (Opec) weighs on prices.
Other sources confirm the decline as well: preliminary data by Reuters estimate that oil loadings from Russian Baltic Sea ports will decline by 13% to 2,1 million tonnes in the first 12 days of July. The mood turned more two week ago, when the International Energy Agency's June monthly market report showed a net build in OECD oil stocks over January-April, and projected more of the same for May based on preliminary data. Since January 2017, shale production has started to edge up and is now nearly back near its peak.
The industry has become a lot more efficient over the three-year downturn, cutting costs and lower breakeven prices.
There are several reasons to be more optimistic on the outlook for the oil price going forward. Furthermore, Kpler expected that the figure was supposed to be even lower in June.