After early year slump, crude oil returns to profit
Mar 13 2018 by Johnny Bowman
While accelerating global growth and OPEC's supply cuts have helped crude oil rally since last summer, the prospect of surging USA production and slowing growth in the future is weighing on the commodity.
"Oil prices moved lower. after (the) Energy Information Administration published a report that crude production from seven major USA shale plays is expected to see a climb", said Stephen Innes who is head of trading for Asia/Pacific at futures brokerage OANDA in Singapore. U.S. West Texas Intermediate (WTI) crude futures fell 27 cents to $61.77 a barrel. The contract on Friday jumped over 3% to settle at $62.04 a barrel on the New York Mercantile Exchange, turning what would've been a weekly loss into a climb of roughly 1.3% from the week-ago settlement.
Brent crude is now above $64.70. In addition, U.S. production reached 10 million barrels per day for the first time since 1970.
Both WTI and Brent as recently as Thursday had marked their lowest settlements since mid-February.
U.S. tight oil production, or shale fracking, should rise by 131,000 barrels a day in April, to a record of 6.95 million barrels a day, according to the U.S. Energy Information Administration's latest drilling report released this week.
The EIA is due to publish its latest weekly USA production data on Wednesday.
In oil markets, US energy companies last week cut oil rigs for the first time in nearly two months, with drillers cutting back four rigs, to 796, Baker Hughes (GE.N) energy services firm said.
On the other hand, the Iranian oil minister Bijan Zanganeh mentioned that the Organization of the Petroleum Exporting Countries or OPEC is going could come to a conclusion on their June meeting to ease the current production curbs by the year 2019. Saudi Arabia, the de facto leader of the oil cartel, would like prices at $70 a barrel or higher, while Iran would like them closer to $60 a barrel.
The news is expected to be light on Monday so most traders expect the price action to be driven by the U.S. Dollar and appetite for risk. At stake is OPEC's production limits, which are among factors helping the oil market's monthslong recovery.
April natural gas bucked the downtrend among its energy peers, settling up 1.7% at $2.778 per million British thermal units, with forecasts for more cold weather in the eastern USA boosting expectations for heating demand.