Oil near flat in quiet trade; supply outlook unclear

NEW YORK — Oil prices were little changed on Monday in quiet pre-Christmas trade as the market waited to see whether US production from shale fields would grow enough to offset planned output cuts by Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers next year.

Brent futures for February delivery lost 29 cents or, 0.50%, to settle at $54.92 a barrel, while US West Texas Intermediate crude for January rose 22 cents, or 0.40%, to settle at $52.12 per barrel on its second to last day as the front month.

“Nothing is really going on,” said Phil Davis, managing partner of venture capital fund PSW Investments in Woodland Park, New Jersey.

“The dollar is flat. Oil is flat. It’s a low margin Christmas trading week, we don’t expect much to happen.”

A stronger greenback pressures demand for dollar-denominated crude as it makes barrels more expensive for users of other currencies.

Jim Ritterbusch, president of Chicago- based energy advisory firm Ritterbusch & Associates, said in a note that implied US output increases would offset a significant portion of planned OPEC production cuts, “especially since we don’t anticipate sustained strong compliance” from OPEC.

“While adherence to (OPEC) cutbacks could be quite high initially, we will be surprised by compliance much above 60% by the end of the first quarter as (US) shale responds to a higher-price environment.”

US oil output is expected to increase as energy companies last week continued to add oil rigs, extending a seven-month drilling recovery.

As a result, US oil production is edging up, rising from almost 8.7 million barrels per day ( bpd) in July to about 8.8 million bpd in December, according to US Energy Information Administration projections.

A week ago, oil prices climbed to a 17- month high after the OPEC and some other producers agreed over the prior few weeks to cut almost 1.8 million bpd in oil output starting in January.

Some analysts expect oil prices to stay strong into early 2017.

Speculators raised their holdings of Brent crude oil futures to a record high last week.

Traders noted a possible delay in Libyan exports provided some support to oil prices earlier in the session.

In Libya, a group guarding oil infrastructure said late last week it had reopened a long-blockaded pipeline leading from the oil fields of Sharara and El Feel. Over the weekend, however, a separate group prevented a production restart at El Feel. —