Oil futures rallied on Friday, reversing early losses, after OPEC sources said it expects limited growth in US oil production this year despite rising prices, industry experts said.
The limited US oil production growth in 2021 will be an important opportunity to manage the market in the short term before a potentially strong increase in shale gas production in 2022.
Brent crude futures rose 43 cents, or 0.6%, to $73.51 a barrel. West Texas Intermediate (WTI) crude rose 60 cents, or 0.8%, to $71.64 a barrel.
Brent and West Texas Intermediate (WTI) crude are in their fourth weekly gains, with both benchmarks gaining about 1.1% weekly.
On Wednesday, Brent settled at its highest price since April 2019, with WTI closing at its highest since October 2018. Earnings were capped by continued concerns about the pandemic and the US dollar, which has strengthened, making oil more expensive than other currencies.
Sources said Tuesday that OPEC Economic Commission Board (ECB) officials and external servers attended a meeting focused on US production. OPEC shared forecasts for the 2021 and 2022 outlook at a separate meeting on Thursday.
While there is general agreement on limited U.S. supply growth this year, an industry source said estimates for 2022 are between 500,000 and 1.3 million bpd.
The general view on shale oil is that prices will rise and/but will come back, but not super fast.
Crude oil prices hit their highest level since 2018, prompting some US energy companies to return to their well beds. Companies increased the number of oil and gas rigs for the second week in a row this week. The number of oil rigs, an early indicator of future production, rose eight this week to 373, the highest since April 2020, according to energy services firm Baker Hughes Co.
On Thursday, Iran’s chief negotiator said an agreement was imminent in talks between Tehran and Washington on reviving the 2015 Iran nuclear deal. This increased the pressure on prices.
Iranians voted in the presidential election on Friday, with Ebrahim Raisi winning the election. However, liberals call for a boycott at home and abroad and do not intend to recognize the result of the vote.