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Published: Tue, January 23, 2018
Economy | By Melissa Porter

Oil posts biggest weekly loss in at least a month

Oil posts biggest weekly loss in at least a month

Rising oil prices could sustain financial returns for US shale drillers even as oil field service companies demand more money for rigs and crews, OPEC said Thursday.

X The cartel's forecast for US output growth this year was revised up by 110,000 barrels per day to 820,000 bpd, as higher crude prices encourage an increase in conventional production.

Latest Opec and IEA oil market reports both highlight the growth in non-Opec oil supply in 2018, pointing to the threats that this conveys to Opec's effort to rebalance the market.

According to the US Energy Information Administration, US crude oil inventories fell for the 9th straight week, declining to 6.9mn barrels (mbs) in the week to 12 January.

Brent crude for March, the global oil benchmark, gave up 70 cents, or 1%, to $68.61 a barrel on London's ICE Futures exchange. Oman's oil minister Mohammed bin Hamad Al Rumhi said that producers were due to discuss in November this year whether to renew their cooperation agreement on supply cuts or enter a new type of agreement.

Oil prices slid yesterday, putting them on course for the biggest weekly falls since October, as a bounce-back in US production outweighed ongoing declines in crude inventories. Some did fold or put production on hold but recent highs mean that shale companies are going back online. On such background, the higher oil prices are now only stimulating U.S. shale oil producers, overshadowing the OPEC's efforts to control excessive production.

OPEC will need to consider its response any USA production increase at its next meeting, in June 2018. As a result, the oil market will return to balance in 2018, he said.

The IEA's estimates of global oil product demand in 2017 and 2018 were left roughly unchanged at 97.8 million barrels a day and 99.1 million barrels a day, respectively.

Mr. Falih-the de facto leader of OPEC-gave the most explicit call for the 14-nation cartel and 10 nonmember allies to keep supporting the oil market into 2019.

"The stage was set for a strong expansion a year ago, when non-OPEC supply, led by the U.S., returned to growth of 0.7 million barrels a day and pushed up world production despite OPEC and non-OPEC cuts", the agency said.

Brent futures settled 23 cents higher at $69.38 a barrel while U.S. West Texas Intermediate (WTI) crude gained 24 cents to $63.97 per barrel. The government of the largest OPEC producer will benefit from a high oil price during the privatization. The OPEC production cap which is still being adhered to by those in the agreement, including non-member Russian Federation has worked to boost prices. However, Total products supplied over the last four-week period averaged 20.5 million barrels per day, up by 5.6 percent from the same period of previous year.

But at the same time, exports of refined products such as diesel, gasoline and aviation fuel rose 155,000 bpd from a year earlier, bringing total "liquid" exports to 8.5 million bpd in October. "Production was steady on a year ago as non-OPEC gains of almost 1 mb/d offset declines in OPEC".

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