Oil players flock to global summit as OPEC, US tensions ease

The oil industry’s biggest names gather this week at CERAWeek in Houston, Texas, the largest energy industry get-together in the Americas, at a time when US shale production is booming, global demand is rising and crude prices are at a sweet spot for both big US producers and the Organization of the Petroleum Exporting Countries (OPEC).

Last year’s decision by OPEC to restrain output has drained the global glut that occupied much of the conversation at 2017’s gathering. With oil prices up about 15 percent since oil ministers and top executives convened in Houston last year, fears have receded over a slugfest between OPEC and US shale.

Rising prices have US shale producers pumping more, sending total US output to an all-time record of above 10 million barrels per day (bpd). This year, the US could even surpass Russia as the world’s largest oil producer.

OPEC, meanwhile, has shown no signs of moving to produce more, with output from members at a 10-month low. The cartel’s leaders have even expressed interest in keeping some production curbs in place through 2019.

Oil ministers and their advisers will use the conference to put shale under a microscope, said Dan Yergin, vice chairman of the conference’s organizer IHS Markit.

“OPEC is still really struggling to understand: ‘What is this new oil business called shale?’” said Yergin. “This conference is a field trip for OPEC to a different reality in oil.”

They have scheduled dinners with shale executives and financiers for the second time in two years, underscoring the maturation of a relationship between big petrostates and a once-upstart industry that weathered OPEC’s best efforts to bury it under a supply glut from 2014 to 2016.