Oil prices dip as rising U.S. output offsets OPEC-led cuts

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices dipped on Friday as rising crude output from the United States was offsetting efforts by OPEC and other producers to prop up the market by cutting supplies.

Brent crude futures, the international benchmark for oil prices, were trading at $56.17 per barrel at 0556 GMT, down 7 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $53.77 a barrel, down 1 cent.

Trading activity during Asian business hours was extremely low due to the start of the Lunar New Year holiday in most countries of the region, including China and Singapore.

Traders said growth in U.S. output was counteracting efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia to reduce a global fuel overhang, resulting in range-bound prices.

“U.S. producer hedging via futures and increasing shale production offset the progress OPEC has made with its production cut implementation,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

“Market participants are hyper-focused on two issues: shale’s response to higher prices and OPEC compliance,” Barclays bank said.

“Producers and OPEC countries are all talking their books, yet the jury is still out,” it added, referring to widespread scepticism over compliance with announced cuts.

The British bank said it expected Brent and WTI prices to average $55 and $53 per barrel respectively for the first quarter.

OPEC and other producers have agreed to cut production by almost 1.8 million barrels per day (bpd) for the first half of 2017 to fight a supply overhang that has seen between 1 million and 2 million bpd of crude being produced in excess of consumption over the past two years.

U.S. oil production, however, has risen by around half a million barrels per day since mid-2016 to 8.96 million bpd.

Despite the possibility that the OPEC-led supply reduction might not lift prices much further, investment bank Jefferies gave a bullish outlook for the industry’s profitability based on cost-cutting efforts by all producers.

“Conditions for the integrated oil sector are arguably the most favourable since 2012 (as) company self-help measures have driven break-even prices down to $50 per barrel, while OPEC intervention in the oil markets has likely put a floor on Brent prices in the low-$50’s,” Jefferies analysts said in a note.

(Reporting by Henning Gloystein; Editing by Joseph Radford and Sonali Paul)

Share this article

Follow Offshore Energy Today

Events>

<< Jun 2019 >>
MTWTFSS
27 28 29 30 31 1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30

Uganda International Oil and Gas Summit 2019

Uganda International Oil & Gas Summit will once again examine the industry’s developments…

read more >

Nigeria Oil & Gas Conference & Exhibition 2019

The annual meeting once again proved to be a great success, gathering over 700 industry professionals…

read more >

08th OIL & GAS AFRICA 2019 CONFERENCE

OIL & GAS AFRICA is one of the most prime regional & international Oil and Gas conferences in East Africa…

read more >

Gas Indonesia Summit 2019

Gas Indonesia Summit & Exhibition is returning for the fourth edition in Jakarta…

read more >

Jobs>

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply