PARIS (Reuters) - Oil prices could fall again by the end of the year due to a rapid increase in U.S. shale production, the chief executive of French oil and gas giant Total said on Thursday.
Crude has recovered from lows reached in January 2016 and has mostly hovered above $50 a barrel since the beginning of the year following an agreement by the Organization of the Petroleum Exporting Countries to cut production.
“The price may fall again ... U.S. producers who have recovered quickly, will regenerate an influx of supply by the end of the year and this could have a negative impact on the markets,” Patrick Pouyanne said during a conference in Paris.
U.S. shale oil producers are planning to expand production following the rebound in prices.
“The OPEC agreement is in place and working very well,” Pouyanne said. “I think it (OPEC agreement) will be extended, but in simple terms, the short-term effect on the markets is not immediate because stocks are extremely high.”
Pouyanne said it will take another 18 to 24 months, rather than six months, for demand to outstrip supply.
Oil prices regained some ground on Thursday after steep losses the previous day, as Kuwait said it expected the OPEC-led effort to cut supplies would be extended beyond the middle of the year.
Reporting by Benjamin Mallet; Writing by Bate Felix, editing by David Evans