Oil edged up on Friday, recovering some of its steep falls earlier in the week, but crude is still set for its worst first-half decline in two decades despite ongoing production cuts. Ciara Lee reports.
It may have recovered some of its losses this week, but oil is set for its worst first-half decline in two decades. Despite ongoing efforts to cut production by 1.8 million barrels per day, crude prices have fallen by around 20 percent this year. And 15 percent of that happened AFTER OPEC extended its output cuts into 2018. Production outpacing consumption has dogged markets since 2014, largely due to the rise of U.S. shale. (SOUNDBITE) (English) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "They raise questions over the durability of an OPEC and non OPEC oil producing cartel's capacity to push through quota reductions. But I think there is the other side to this as well and that is the demand side which raises big questions as to whether the global economy is in actual fact growing or whether it is subsiding." At the heart of the glut is the recent efforts to reduce production from the traditional suppliers of OPEC and Russia. As they've decreased output US producers have ramped it up. (SOUNDBITE) (English) CHARLES STANLEY DIRECTOR OF PRIVATE CLIENT RESEARCH, JEREMY BATSTONE-CARR, SAYING: "It's always been thought that the oil price needs to rise and stay above about 50 dollars per barrel to make U.S. shale producers profitable. But of course given advances in technology it is now thought that maybe those producers can be profitable at a lower oil price." And they're showing little sign of slowing down. Thanks to shale drillers, U.S. oil production has risen by over 10 percent in the last year, close to the level of top exporter Saudi Arabia.