Oil Falls for Third Day over Ris­ing US Shale Out­put

THISDAY - - NEWS - Ejio­for Alike with agency re­port

Crude oil prices dropped for a third day from close to two-year high yes­ter­day as ris­ing United States out­put ham­pers ef­forts by the Or­gan­i­sa­tion of Petroleum Ex­port­ing Coun­tries (OPEC) and non-OPEC to cut out­put and re­bal­ance the oil mar­ket.

Traders and in­vestors have re­port­edly ques­tioned how much the prospect of fur­ther rises in United State out­put might over­shadow some of the op­ti­mism that OPEC-led pro­duc­tion cuts would tighten the bal­ance be­tween crude sup­ply and de­mand.

The US shale out­put for De­cem­ber is set to rise for the 12th straight month and Fitch Rat­ings said in its 2018 oil out­look that oil prices above $60 per bar­rel may not be sus­tained.

Brent crude fu­tures were last down at $62.82 a bar­rel yes­ter­day, while US West Texas In­ter­me­di­ate (WTI) fu­tures fell to $56.49.

Both bench­marks early in the pre­vi­ous week hit high last seen in 2015, but Reuters quoted traders as say­ing that the mar­ket had lost some mo­men­tum since then.

Traders said they were cau­tious about bet­ting on fur­ther price rises.

This sen­ti­ment comes in part on the back of ris­ing U.S. oil out­put C-OUT-T-EIA, which has grown by more than 14 per­cent since mid-2016 to a record 9.62 mil­lion bar­rels per day (bpd).

The US gov­ern­ment said on Mon­day that the US shale pro­duc­tion in De­cem­ber would rise for a 12th con­sec­u­tive month, in­creas­ing by 80,000 bpd.

Fitch Rat­ings said in its 2018 oil out­look that it as­sumed 2018 “av­er­age oil prices will be broadly un­changed yearon-year and that the re­cent price re­cov­ery with Brent ex­ceed­ing $60 per bar­rel may not be sus­tained”.

So far, in 2017, Brent has av­er­aged $54.5 per bar­rel.

De­spite the cau­tious sen­ti­ment, traders said oil prices were un­likely to fall far, largely due to sup­ply re­stric­tions led by the OPEC and Rus­sia, which have helped re­duce ex­cess stock­piles.

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