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Page added on April 29, 2017

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Dream On, OPEC – The US Will Never Act Like A Cartel


Apparently, the United States is out of sync with the rest of the world – which some might argue is good – because tight oil producers didn’t cut back when OPEC finally managed to address market volatility.

Deon Daugherty
Deon Daugherty, Senior Editor, Rigzone
Senior Editor, Rigzone

OPEC Secretary General Mohammed Barkindo called out the United States as outside the “global trend of de-stocking” its production, during his April 27 remarks in Paris to the 18th International Oil Summit.

Since its agreement in late November, a step that occurred after a number of fits and starts, OPEC agreed to cut its production by 1.2 million barrels per day (MMbpd). That was in response to dismally low oil prices that had spiraled downward for at least a year. The move has had mixed results as far as increasing global crude prices, but experts generally believe the goal of reducing inventories is heading in the right direction.

“The U.S. has evidently not been reflective of the rest of the world, given rising production there in the first quarter of 2017, but even [there] the market has now witnessed three consecutive weekly crude stock draws as refinery utilization has risen,” Barkindo said, according to a text that OPEC released.

It wasn’t the first time Barkindo has taken a subtle jab at the United States. In December, Barkindo told the Center on Global Energy at Columbia University that the future will be one of increasing energy interdependence.

“We do not live in a world of independent energy nations,” he said at the time. “In the context of this vision, OPEC sees benefits in exploring and initiating an energy dialogue with the U.S. We believe this engagement is vitally important to all.”

It’s true that production at shale plays across the United States has increased in recent months. However, it’s just as true that production in the United States declined well before OPEC took its head out of the sand and realized hoarding market share wasn’t a great long term plan.

From 2015 to 2016, oil production the U.S. Lower 48 declined 6.1 percent – about 55,000 barrels per day – for an average production total of 8.39 MMbpd at the end of the year, according to the U.E. Energy Information Administration (EIA). OPEC’s cuts began in January.

Producers in the United States didn’t need a decree from on-high to respond to the market. There was too much global supply. Oil prices declined – and then declined again. They pulled back on production.

“It was absolutely market-driven production cuts,” Dave Pursell, managing director and head of macro research at Tudor, Pickering, Holt & Co., told me during a recent chat. “No, the U.S. will never exhibit cartel-like behavior. But if we do, then something has massively gone wrong in Washington.”


9 Comments on "Dream On, OPEC – The US Will Never Act Like A Cartel"

  1. makati1 on Sat, 29th Apr 2017 7:14 am 

    More bullshit from RIGPORN.

  2. rockman on Sat, 29th Apr 2017 7:20 am 

    Mak – ??? So does that mean the US might eventually act like a cartel.

  3. dissident on Sat, 29th Apr 2017 7:22 am 

    Indeed, the US will just keep on acting like the mafia.

  4. Davy on Sat, 29th Apr 2017 7:39 am 

    Emotional anti-Americans who are not capable of analysis without feelings fail to understand the US oil sector is not capable of becoming a cartel without changes in the law. It is illegal and further not in the interest of the US. If war or a critical situation develops then we might see oil used as a tool of conflict or diplomacy. Don’t’ forget the US is a major exporter of refined products. That in itself is a strategic asset that could be used as an embargo. The US refinery sector is one of those TBTF sectors that could affect the global economy. The US oil production complex is a TBTF sector that can affect the global oil markets.

  5. Boat on Sat, 29th Apr 2017 9:08 am 

    If the US colluded with other countries it would be called greed and yanking the very life from poor people just wanting to crawl out of poverty. If Russia/OPEC cut oil production to stack their coffers, no problem. This is the jaded world we live in. Lol

  6. Anonymouse on Sat, 29th Apr 2017 1:36 pm 

    What mak is saying is, this farticle is so full of shit, deflections and so larded up with holier than thou exceptionalism, that YOU could written it rockieman.

  7. makati1 on Sat, 29th Apr 2017 5:54 pm 

    Rockman, the oily industry has a very short life expectancy. When the financial system fails that is keeping it live, so goes oil. That financial system is living on borrowed (pun intended) time and is soon going to implode under massive debt. When the dust settles, we will live in a whole different world. Oil may still be pumped, but it will be far more expensive and not a common consumer item like today. all of the ‘investors’ will be broke.

  8. makati1 on Sat, 29th Apr 2017 5:56 pm 

    Anon, you and I know that, but those invested in the oily system (the American Dream) are in deep denial.

  9. Anonymouse on Sat, 29th Apr 2017 7:18 pm 

    Yes, rockie was trying to be clever, of course uSoil is a cartel and I dont think you would disagree. But diss definitely nailed it with his mafia comparison.

    Its no different than thieves getting upset when you call them a thief. Us oil is a cartel, and going beyond oil, the uS is a really a collection of cartels and state sponsored rackets. Back in the early part of the 20th century, the practice was so pervasive, they had a word for them, ‘trusts’. It meant the exact same things as cartel, monopoly does today. Old us political cartoonists were aware of the concept of cartel, even if they just used a different term for it.

    The more things change…..

    In Deons case, like all good merikants, she probably does not know any history, including the uS’s, but she does know full well that uS oil is a cartel(or mafia if you prefer), thus she took the time to remind everyone it really isnt.(it is).

    ‘OPEC’ of course, hardly matters and hasnt for decades. Nor is it a true cartel. But amerikans always need ‘enemies’, even ones they control, and OPEC is to uS oil as the USlamic state is to the uS military and corporate regime. A permanent ‘enemy’ they themselves created and control.

    Spin matters, specifically in the uS oil cartel, right rocky?

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