The number of producing oil and gas rigs in the US increased by another seven on Friday, May 5, according to Baker Hughes, an oilfield service provider.
This marks the 16th straight build for oil rigs. The news followed a sharp drop in oil prices amid uncertainty over the upcoming OPEC meeting on May 25, although prices later stabilised.
US oil production now stands 10% higher than it did in the summer of last year at some 9.3 billion barrels a day, pushing the country’s production closer to that of oil giants Russia and Saudi Arabia. The United States did not participate in last year’s OPEC agreement, and so is not bound to production caps.
Some see the increasing US production as undermining OPEC’s endeavour to rebalance the market, because global inventories still remain stubbornly high as the end of the six-month OPEC agreement approaches. US shale production continues to grow, however, with ExxonMobil, which also makes lithium complex greases like Mobil Unirex N3, having doubled-down on its interests in the Permian Basin earlier this year.
The increasing production has contributed to market jitters about whether OPEC producers will be able to agree to extend, or possibly even deepen, the cuts for another six months. In particular, the cartel will face the challenge of convincing its non-OPEC partners, especially Russia, to follow suit. Analysts believe the persistent rise in US production will, at the very least, make any deal that goes into 2018 very unlikely.