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27 Feb, 2019 09:38

BP boss Dudley says US shale is 'a market without a brain’

BP boss Dudley says US shale is 'a market without a brain’

The growing US shale oil sector is a “market without a brain,” because it is only reacting to market signals unlike other major producers of crude, according to the head of British energy major BP, Bob Dudley.

“The US is probably the only country that completely responds to market signals... like a market without a brain. It just responds to price signals,” Dudley said at the International Petroleum Week conference in London, as cited by Reuters.

“Unlike Saudi Arabia and Russia, which adjust their output in response to gluts or shortages in oil supplies, the US shale market responds purely to oil prices,” the CEO added.

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US production volumes saw a weekly growth of around 100,000 barrels per day, reaching a record level of 12 million barrels a day as February 15. At the same time, inventory levels beat analysts’ forecasts, rising for the fifth consecutive week and amounting to 3.7 million barrels.

According to experts, US production will extend the current growth, and is poised to evoke further concerns about oversupply. New York-based Citigroup expects US shale output to hit 13 million barrels per day by the end of the current year with an average daily level to hover around 12.5 million barrels during the year.

The US shale oil sector needs oil to trade at $40-$60 per barrel to be profitable for both the country’s economy and crude-producing companies. Last year, shale production helped the US to become the world’s biggest oil producer.

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Earlier this week, US President Donald Trump once again blasted the Organization of the Petroleum Exporting Countries (OPEC) and its leading member Saudi Arabia for repeated attempts to stabilize global prices for crude.

“OPEC, please relax and take it easy,” Trump tweeted on Monday. “World cannot take a price hike - fragile!”

Brent crude rose slightly and was trading at $65.51 a barrel at 07:22 GMT on Wednesday, while US crude benchmark West Texas Intermediate (WTI) was up 40 cents to $55.90 a barrel.

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