Crude falls on US shale concerns
new york — Oil’s recent threeyear highs are looking increasingly elusive as the week ends, with mounting fears that current prices will spark too much production, all over again.
Futures in New York slid 0.9 per cent on Friday to the lowest level in more than a week and posted the first weekly loss since mid-December. The International Energy Agency (IEA) on Friday said it sees “explosive” growth in US oil output in 2018. A day earlier, the Energy Information Administration showed the biggest gain in US crude production since October.
“The higher the price is, the more production we are going to get out of the US, which threatens the price,” James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said. “We are in that threatening cycle right now.”
The enthusiasm that put the crude market in the groove for another year of rising prices is giving way to some caution. With technical indicators signalling oil is overbought, hedge funds cut their bullish bets on Brent crude from a record-high, according to ICE Futures Europe data released on Friday.
The Organisation of Petroleum Exporting Countries, which will meet in Oman this weekend to review its strategy, is sticking to its production curbs. But some analysts expect the output-cut agreement will end earlier than planned. Plus, the compliance rate for the 10 non-Opec nations participating in the deal plummeted to 78 per cent in December, the lowest level since July,
The higher the price, the more production we will get out of the US James Williams, President of energy researcher WTRG Economics
according to Bloomberg calculations from preliminary IEA data.
West Texas Intermediate for February delivery dropped 58 cents to settle at $63.37 a barrel on the New York Mercantile Exchange. Total volume traded was about 11 per cent below the 100day average. Prices are down 1.5 per cent last week.
Brent for March settlement slipped 70 cents to end the session at $68.61 a barrel on the Londonbased ICE Futures Europe exchange. Prices fell 1.8 per cent last week. — Bloomberg