This morning oil prices pulled back across the board with January WTI down -1.05% to $57.70 a barrel, January RBOB fell -2.00% to $1.71 per gallon and HO lost -1.81% to a $1.91 per gallon. These losses are attributed to data released by Baker Hughes late last week that US drilling and oil rig count had again risen by 6 to 929 since November 22nd 2017. The rig count has risen +332 since last year’s count on December 2nd 2016. This news is an indication of continued rising U.S. oil production, and amid news of OPECs intensions to remain sternly compliant with the 1.8 million bpd production-cut agreement, the market carries apprehension that this growing U.S. production could pose a solid opposition to OPECs goals.
OPECs goal here is to extend production cuts past its initial end date in March to the end of 2018 and executing this goal would then, in their eyes curb the global supply glut drooping over the market. As U.S. oil producers are not a part of the OPEC production cut deal, this rise in rig counts is a sign of increased production and may hamper OPECs goals in the short term. The Organization of the Petroleum Exporting Countries plans to revisit the cut-policy in June, but we’ll have to wait and see how this steady U.S. production will impact their decision making going forward.