The meteoric rise in U.S. oil production has ended, easing a global glut and driving a rebound in crude prices from below $50 a barrel, according to crude trader and hedge fund manager Andrew J. Hall.

Oil production from Texas to North Dakota peaked at almost 10 million barrels a day in February and has been falling since then, Hall said in a letter Friday to investors in Astenbeck Capital Management LLC, his commodities hedge fund. A drastic reduction in drilling rigs is starting to shrink U.S. oil output, according to U.S. government data cited by Hall.

That’s helped drive a 36 percent rally in the past six weeks, and prices will continue to rise because it will be harder for producers to ramp up than it was to cut back, Hall said in his letter. Lower crude prices have also boosted demand, while the risk of supply disruptions across the Middle East is growing amid sectarian tensions.

“We have now reached a turning point,” Hall wrote. Growing demand and supply pullbacks “rendered all the doomsday forecasts self-defeating.”

West Texas Intermediate, the U.S. benchmark crude, settled at $59.15 a barrel Friday, marking a 3.5 percent rise for the week.

Astenbeck funds were up more than 10 percent through April, and gained 10 percent in 2014 even as oil fell by more than half, according to people familiar with its performance, who declined to be identified because the information was not public.

http://www.bloomberg.com/news/articles/2015-05-03/the-shale-boom-has-already-gone-bust-at-least-for-now?cmpid=yhoo

There seems to be hope for the economy.

Saudi Arabia have shown dem pepper. they've been hyping war and break up in every oil producing countries just to shut them down. but Saudis and Russia won't allow their shale oil to boom. instead Saudis have to increase their output to 12m barrels a day. in the whole oil bearish the losers are Venezuela, Iraq, Iran , Nigeria and Russia. the countries that have saved more than a enough for the next 20years are the winners. Saudis , Kuwait

Every sensible analyst knew the Saudi solution of refusing to drop production was the best. Eventually the cost of producing shale oil was going to be too high to sustain amidst sliding oil prices.

This is an example of a country though very much allied with the west particularly America, refused to be teleguided by them. They were able to do this because they had leaders who wanted the best for their country and had saved up enough for the rainy day.

Being friends with America doesn't mean you can't look them in the face and stand your ground once in a while.

Kei144:

There seems to be hope for the economy.

Not really

From what I learnt, shale becomes quite profitable to US producers only after the price of oil reaches some $60 to $80 per barrel
I think what this means is that once OPEC oil prices start going up again, America companies will start producing their shale oil in bulk. thereby putting a downward pressure on the price of oil to remain between $60 to $80 per barrel..

The only thing that can upset this delicate balance is if there is strong growth in one or more of the big economies thus leading to an increased demand for oil. Or, if one of the big oil producers encounter a situation such as war which would mean that supply would be reduced

Hm

So what happens now?

Kei144:

There seems to be hope for the economy.

...and besides
i think we should let go of this oil business as a determinant of our economic success

if we continue to insist that our wealth as a country would be dependent on oil
then i'm afraid those whose villages sit on the oil wells and oil pipeline routes
would by necessity gradually determine the fate of project Nigeria

Interesting to know that low crude price does not bode well for USA's shale oil success as well.

Even though the era of + $100 per barrel is not likely to return, it is reasonable to expect it to stabilize at around $70 a barrel.

And once our economy is diversified over the next four years, our reliance on oil for foreign earnings will reduce which in turns takes off pressure brought about by the fall in crude price.

If Buhari wanna succeed, he nids to diversify d economy instead of depending on out oil
He seems clueless

And to think that the US barely exports its oil even though they are largest producers of oil at the moment. I don't see oil prices going higher than 65 dollars for the next 12 months. Besides, one of the most difficult tasks facing us is finding buyers for our crude. The US has about three oil fields that produces the same type of oil like that of Nigeria, the embargo lifted on Iran makes it worse.

esere826:


...and besides
i think we should let go of this oil business as a determinant of our economic success

if we continue to insist that our wealth as a country would be dependent on oil
then i'm afraid those whose villages sit on the oil wells and oil pipeline routes
would by necessity gradually determine the fate of project Nigeria

Words on marble!!! This is Buhari's first challenge. This our oil thing needs to stop! After all, we never had our cocoa or groundnut era.

esere826:


i think we should let go of this oil business as a determinant of our economic success

if we continue to insist that our wealth as a country would be dependent on oil
then i'm afraid those whose villages sit on the oil wells and oil pipeline routes
would by necessity gradually determine the fate of project Nigeria

My brother, lets be realistic.
Apart from oil, how else will the federal government generate revenues of over 50 billion dollars in a fiscal year over the next 10 years? How possible is it?
Lets not kid ourselves, our dependence on oil is here to stay, there's nothing we can do about it.
People say diversify the economy but how? Our economy is already diversified but it is too small and disorganized to enable diverse revenue streams for the federal government.

Sweetguy25:


My brother, lets be realistic.
Apart from oil, how else will the federal government generate revenues of over 50 billion dollars in a fiscal year over the next 10 years? How possible is it?
Lets not kid ourselves, our dependence on oil is here to stay, there's nothing we can do about it.
People say diversify the economy but how? Our economy is already diversified but it is too small and disorganized to enable diverse revenue streams for the federal government.

so true n on point. nigerian economy isnt monolithic as people think, gej did something in dat diversification thing but the problem is oil money will always overshadow any input from other sectors.