In their latest projections, The Energy Information Administration (EIA) has reported that they are expecting U.S. shale to produce 9.3 million barrels of oil a day in 2017. This marks a slight increase from the EIA’s projections in May. This rise in production was preceded by several weeks of decline, and the EIA are also expecting an increase in demand for oil in the upcoming months. The agency is hoping that these two factors will hopefully stabilize the market. However, there has also been some more troubling news regarding the stock market price of oil.
The current price of oil on the stock market has dropped considerably over the past couple weeks, which is causing companies to worry about the possibility of overstocking. With the potential for more oil coming out of refineries, they are worried that if not enough is being exported this could result in a global problem. Currently, no steps have been taken to avoid this issue, as many American drillers have been installing more oils rigs for the past 20 weeks. While many American companies aren’t currently taking steps to rectify this issue, the international community has tried to curb the risk of oversupply. In an attempt to gain some control over the impending oversupply, the Organization of Petroleum Exporting Countries (OPEC) has attempted to get its member countries to reduce the amount of oil the export to about 1.8 million barrels by March. OPEC has taken this action in an attempt to stop the fall in the price of oil. There is also a continuing diplomatic situation between Qatar and seven other Arab nations, which has the potential to further destabilize the global oil market.
High U.S. production may counteract OPEC’s attempt to suppress supply and may lead to lower prices at the pump for consumers, however, it should be noted that consumers are about to head into the summer driving season which tends to see higher gas prices. In addition, the potential destabilizing effect of the Qatar crisis may further change global oil supply.