OPEC continues to underestimate US oil production
OPEC cut oil production in December by the largest amount in more than two years, but the cartel believes U.S. output will rise faster than previously expected.OPEC's suicidal market share strategy had the unintended consequence of seeing US producers lower cost by becoming even more productive. Operations in the Permian Basin are now in some cases costing less per barrel than it does in many OPEC countries when you factor in all of the nonproduction expenses that go into their budgets.
Crude production in Saudi Arabia and other member nations of the Organization of Petroleum Exporting Countries dropped by 220,900 barrels a day last month, the month before the group has promised to begin slashing its oil output by 1.2 million barrels a day.
Saudi Arabia reduced production by 149,000 barrels a day, alongside cuts in Nigeria and Venezuela. But output edged up slightly in Iran, Iraq, Libya and other countries, OPEC said in its monthly oil market report on Wednesday.