Oil Pauses as U.S. Output Crosses Milestone
By Christopher Alessi
LONDON -- Oil prices were mixed Friday morning, as the market weighed rising U.S. crude output against more bullish factors such as increased compliance with OPEC-led production curbs.
Brent crude, the global benchmark, was down 0.10% at $69.58 a barrel on London's Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.06%, at $65.84 a barrel.
U.S. oil production, driven by shale extraction, surpassed 10 million barrels a day in November for the first time in nearly 50 years, according to data released this week by the U.S. Energy Information Administration, reigniting concerns the market is oversaturated with crude.
But prices have still found support from adherence to OPEC's deal to limit supply.
Compliance by the Organization of the Petroleum Exporting Countries with the oil cartel's agreement to hold back production by 1.8 million barrels a day rose to 138% last month, according to a Reuters survey.
That is a "sign of their steadfast commitment to eliminating the global supply surplus, according to Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd.
OPEC and 10 members outside the cartel, including Russia, first agreed in late 2016 to curb global crude output by nearly 2% in an effort to rein in a supply glut that has weighed on prices for over three years. The participants decided late last year to extend the deal through the end of this year.
The cartel's efforts have helped boost crude prices by more than 50% since mid-2017. But higher prices have motivated U.S. shale producers to ramp up production, exacerbating oversupply concerns and putting a cap on prices, analysts say.
Still, prices have been relatively steady in recent weeks, helped by a weakening U.S. dollar and production outages in OPEC-member Venezuela.
"One important role in this rapid price recovery is played by the weak U.S. dollar, which is again nearing the three-year low it hit last week, " analysts at Commerzbank wrote in a note Friday.
Oil market observers are looking ahead to the release of weekly data Friday afternoon by Baker Hughes that will report the number of active rigs drilling for oil in the U.S., a proxy for activity in the sector.
Among refined products, Nymex reformulated gasoline blendstock -- the benchmark gasoline contract -- was up 0.11%, at $1.90 a gallon. ICE gas oil, a benchmark for diesel fuel, changed hands at $620.25 a metric ton, up 0.57% from the previous settlement.
Write to Christopher Alessi at firstname.lastname@example.org
(END) Dow Jones Newswires
February 02, 2018 06:53 ET (11:53 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.