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Analysts don't expect growing shale oil production in US will strongly affect prices

Oil prices will remain within the achieved price band, the experts believe

MOSCOW, January 9. /TASS/. Growing rig count in the United States evidencing more active shale oil production is still unable to exert any strong pressure on oil prices, analysts questioned by TASS said on Monday. The market is still waiting for delivery of the oil production cut agreement between OPEC and non-OPEC countries, they said.

Brent oil futures dropped on the London’s ICE by 2.17% to $55.86 after Baker Hughes had released data on growing rig count in the United States. Urals-Primorsk oil futures with performance in March 2017 declined 2% to $52.44 on the SPIMEX.

"Certainly, the rig count will grow proactively in the United States under current oil prices. However, this will not exert strong impact on prices so far. The market is waiting for implementation of arrangements between OPEC and other producing countries," the analyst of Raiffeisenbank Andrei Polischuk said. The oil price may grow to $60 per barrel "if we see from monthly data that the agreement is observed," he added.

"If it is confirmed that OPEC and non-OPEC countries indeed reduce [production - TASS], this will make possible to compensate [the price decline]," Finam analyst Alexei Kalachev said. "Oil may even slightly grow, within $5," he added.

The rig count is growing not merely in the United States but also in Africa and Asia, Sberbank CIB analyst Valery Nesterov said. He did not expect dramatic growth of shale oil production in the United States. "The same banks will not hurry with extension of new loans [to producing projects - TASS]," the analyst said.

Oil prices will remain within the achieved price band, the experts said. "Everyone understands [prices] should not be hiked; otherwise dramatic reactivation of shale projects will start," Kalachev said. at the same time, if it turns out that "countries negotiating reduction are not doing so, the price may then drop and it will have to be supported by new negotiations, statements and stove piping," he added.