Published: Wed, February 08, 2017
Economy | By Melissa Porter

Oil prices fall as reviving shale balances OPEC cuts

The total output from those 10 countries in January was 1.14 million barrels per day lower than October levels, according to S&P Global Platts.

USA crude futures fell 87 cents, or 1.64%, to $52.14 a barrel on the New York Mercantile Exchange. Price of the Brent crude oil at the London ICE (Intercontinental Exchange Futures) rose $0.10 to trade at $55.82.

Additionally, a strengthening USA dollar is also weighing on crude oil prices - oil is priced in dollars and becomes more expensive for foreign buyers as the USD appreciates against their currencies.

The Organization of the Petroleum Exporting Countries agreed on November 30 to cut output by 1.2 million bpd to 32.5 million bpd for the first six months of 2017, in addition to 558,000 bpd of cuts agreed by non-members such as Russia, Oman and Mexico. Also, a report from Genscape showed a rise of one million barrels in crude oil inventories at Cushing, Oklahoma. Some analysts have suggested that the big bets by speculative investors could make the market vulnerable to a cascading selloff.

In a note to clients, analysts at JBC Energy said that the oil market is in need of a strong new catalyst to breach $57-level and move higher towards $60, which is not forthcoming at the moment. That was the lowest close for both contracts since January 31.

So far, countries have stuck more closely to their output quotas than many had anticipated, according to preliminary indicators.

Societe Generale oil analyst Michael Wittner said US shale oil output was recovering faster than expected. "Besides these data points, encouraging production numbers from Libya, Nigeria as well as the United States itself are also painting a picture of a limited impact of the Opec/non-OPEC cut".

Iranian Oil Minister Bijan Zanganeh said OPEC should cut crude production "a bit more" in the second half of 2017, Fars news agency reported on Tuesday.

OIL fell on Monday as ample U.S. supplies and excess speculative length outweighed OPEC output curbs and rising tensions between the United States and Iran. "We're figuring out that regardless of what OPEC does, it's not going to change the fact that we're going to continue to build stocks here".

"Gasoline is just getting slaughtered today, and it's dragging crude with it", Bob Yawger, director of the futures division at Mizuho Securities USA in NY, said by telephone.

Natural gas futures remained flat at 3.117 a gallon at the NYMEX.

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