Oil prices drop on increased USA rig drilling

Marco Green
December 11, 2017

The West Texas Intermediate for January delivery decreased 1.66 USA dollars to settle at 55.96 dollars a barrel on the New York Mercantile Exchange, while Brent crude for February delivery lost 1.64 dollars to close at 61.22 dollars a barrel on the London ICE Futures Exchange. US West Texas Intermediate (WTI) crude futures were at $57.10 a barrel at 0019 GMT, down 25 cents, or 0.4 percent, from their last settlement.

A rising greenback attracts financial traders who switch investments between commodity futures and foreign exchange.

Preventing prices from sliding further was booming oil demand from China, which will this year overtake the United States as the world's biggest crude importer.

Stephen Schork, editor at The Schork Report, told CNBC that oil prices will fall to the lower $50s due to "the fact that US production continues to hit records and a nice build in gasoline", and that the current high prices for crude are at the top of the market. "This will inevitably see China become more reliant on crude oil imports over our forecast period, with import dependency set to increase from a record 68.0 percent in 2017 to almost 80 percent by 2021", BMI Research said. Brent crude futures, the global benchmark for oil prices, were down 32 cents, or 0.5 percent, at $63.08 a barrel.

This week, oil prices have been a mixed bag of ups and downs, and on Wednesday they dropped shortly after the Energy Information Administration (EIA) reported a 5.6-million-barrel draw in crude oil inventories for the week to December 1, but a major build in gasoline inventories of 6.8 million barrels.

Kloza noted that while the USA surpassed 9.7 million barrels per day in crude output - something that hasn't happened since April 1971 - he said that figure will reach 10 million by early next year.

Other reports by Click Lancashire

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