Price of Oil Down, Production Still Going Up
“Too much oil, too fast” is the best way to describe the US oil boom, at least from an investor’s point of view. Prices are now at an extremely low range and America continues to pump crude up to such a level that is starting to get difficult to deposit it. Oil is being pumped faster than any other time since 1972 and storage tanks are running out of place.
Starting 1944, the oil field services company Baker Hughes has been releasing a weekly survey of rigs out drilling for oil. Yet, one started to pay such a great attention towards this field only after oil prices started to drop by more than half. It became part of the day to day vocabulary among oil investors who are impatiently waiting for a sign that would foresee the end of the glut.
Although rigs have been closing rapidly, oil production is not slowing yet. On the contrary, US production has been raising for the fourth week consecutively, reaching a rate of 9.3 million barrels a day. US inventories rose as well, for the eighth consecutive week, to 444 million barrels, with a jump of 2.4 percent, according to U.S. Energy Information Administration report and remain at their highest level in the last 80 years.
Exxon, one of the largest oil companies in the world announced that, in spite of the current situation, will stick to its production target, established when oil was traded for more than $100 a barrel. In addition, Saudi Arabia’s oil minister, Ali Al-Naimi also declared recently that his country won’t cut production either.