Oil prices edge higher on more bal­anced mar­ket

OPEC, ri­vals an­nounced cuts of al­most 1.8m bpd

Kuwait Times - - BUSINESS -

Oil prices rose yes­ter­day as a weaker dol­lar and the de­lay of new Libyan oil ex­ports boosted bench­marks, amid ex­pec­ta­tions of tighter crude sup­ply go­ing into 2017.

Brent crude fu­tures traded at $55.47 per bar­rel at 0946 GMT, up 26 cents from their last close. US West Texas In­ter­me­di­ate (WTI) crude fu­tures were up 30 cents at $52.20 a bar­rel. An­a­lysts said the in­creases, which built on gains of around 2 per­cent on Fri­day, were driven by a de­lay in crude oil sup­plies from Libya. “It looks like the Libyan story and the weaker US dol­lar are coun­ter­bal­anc­ing” bear­ish fac­tors, said Ta­mas Varga, an­a­lyst with PVM Oil As­so­ci­ates. “We should ex­pect higher prices in the near-term fu­ture.” Late last week, a group guard­ing oil in­fras­truc­ture in Libya said it had re­opened a long-block­aded pipe­line lead­ing from the oil­fields of Sharara and El Feel, but a separate group had pre­vented a pro­duc­tion restart at El Feel. Ad­di­tion­ally, the US dol­lar fell back against a bas­ket of other cur­ren­cies since hit­ting 2002 highs last week. A strong dol­lar makes oil more ex­pen­sive for hold­ers of other cur­ren­cies.

Some ex­pected the strength in oil prices to con­tinue into early 2017 due to a deal be­tween the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries and other pro­duc­ers to cut al­most 1.8 mil­lion bar­rels per day (bpd) in oil out­put from Jan­uary. “With in­vestors now ex­pect­ing a rel­a­tively high level of com­pli­ance with the pro­duc­tion-cut agree­ments, prices should be well sup­ported,” ANZ bank said yes­ter­day. De­spite this, there were fac­tors that cast a shadow on mar­kets, pre­vent­ing prices from ris­ing more.

In the United States, which did not par­tic­i­pate in the out­put-re­duc­tion deal, drilling for new oil has in­creased for seven straight weeks. Drillers added 12 oil rigs in the week to Dec. 16, bring­ing the to­tal count to 510, the high­est since Jan­uary, though still be­low 541 rigs a year ago, en­ergy ser­vices firm Baker Hughes said on Fri­day.

“Since its trough on May 27, 2016, pro­duc­ers have added 194 oil rigs (+61 per­cent) in the US,” US bank Gold­man Sachs said. As a re­sult, US. oil pro­duc­tion is edg­ing up, ris­ing from be­low 8.5 mil­lion bpd in July to al­most 8.8 mil­lion bpd by mid-De­cem­ber. — Reuters

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