Oil holds below two-year highs with focus on US output

Marco Green
December 16, 2017

The IEA pointed out that inventories in developed nations have fallen to their lowest level since July 2015; but in noting that USA crude output next year would climb by 870,000 barrels per day (bpd), up from its November forecast of 790,000 bpd, the agency stated, "On our current outlook, 2018 may not necessarily be a happy New Year for those who would like to see a tighter market; total supply growth could exceed demand growth".

Traders await the Baker Hughes US rig count report due later this afternoon.

Flat average economic growth for the world's leading economies and a not-too-rosy outlook for a balanced market next year sent oil prices lower Thursday.

Crude oil futures drifted higher Friday ahead of US rig count figures that may show domestic producers in the mood to drill. On Wednesday, OPEC had predicted in its own monthly market report that supply and demand were likely to balance out by the end of 2018 thanks to a pick-up in demand, notably from the transport sector.

"Total supply growth could exceed demand growth", it said.

WTI Crude Oil
Weekly February WTI Crude Oil

For the global economy, the Organization of Economic Cooperation and Development reported real gross domestic product for the world's leading 20 economies grew 1 percent in the third quarter, unchanged from the second quarter, but noticeably lopsided. China, the No. 2 behind the United States, declined from 1.8 percent to 1.7 percent.

Meanwhile, US crude West Texas Intermediate (WTI) for deliveries in January increased 14 cents (0.24 percent) and traded at 57.18 dollars.

Expectations for an extended shutdown of a major North Sea crude pipeline also continued to support markets.

While OPEC producers have made a decision to roll over the production cuts to the end of 2018, non-OPEC supply will increase more than previously expected, and total supply growth could exceed demand growth next year, the International Energy Agency (IEA) said in its monthly Oil Market Report on Thursday. According to new forecasts, the production, especially from U.S. shale fields, brings "significant uncertainties" to the oil market. Preliminary weekly data suggests that US production increased further into early December.

Other reports by Click Lancashire

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