There are two big questions hanging over the oil price in 2017. The first is whether the supply truce between Opec and non-Opec producers at the end of 2016 will hold. The second is how fast US shale producers will gobble up market share now that Brent crude once again costs $55 (£45) a barrel. Between 2011 and 2015 tight oil production increased from 1m to 4.5m barrels a day, but that period of growth has essentially been put on hold for the past two years by Opec-orchestrated oversupply. With prices now stabilising, this flexible yet cash-intensive form of production is once again starting to increase. You need only look at the Baker Hughes rig count, which, since hitting a nadir in May 2016, has seen the number of producing oil wells in the main basins rise every week. By Christmas, the count was 66 per cent off the bottom.
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