US oil prices extend modest gains

OPEC compliance offsets record American output

US oil prices extended modest gains on Thursday as the strong compliance of the Organization of Petroleum Exporting Countries (OPEC) with a supply reduction pact offset news that US production topped 10 million barrels per day (bpd) for the first time in nearly half a century.

NYMEX crude for March delivery had risen 56 cents, or 0.86 percent, to $65.29 a barrel by 6:30pm, after ending the last session up 0.4 percent.

London Brent crude for April delivery was up 15 cents, or 0.2 percent, at $69.04, after settling up 3 cents in the previous session.

US crude oil production in November surpassed 10 million bpd for the first time since 1970, and neared the all-time output record, the Energy Information Administration said on Wednesday.

“As oil prices rise, higher shale output is definitely on the market’s mind,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.

Oil output by OPEC also rose in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela and strong compliance with a supply reduction pact, a Reuters survey found.

However, adherence by producers included in the deal to curb supply rose to 138 percent from 137 percent in December, the poll found, suggesting commitment is not wavering even as oil prices hit their highest level since 2014.

“OPEC nations realize that lower production would buoy oil prices and that it’s better for them,” Akuta added.

Oil prices are unlikely to advance much above $70 a barrel in 2018, said another Reuters poll on Wednesday.