OIL FALLS FROM 2015 HIGHS AS RALLY FALTERS
Oil prices dipped on Wednesday, as a rally ran out of momentum a
session after crude hit a near 2-1/2-year high on supply outages in Libya and
the North Sea.
Brent crude futures settled at $66.44 a barrel, down 0.9 percent, or 58
cents. U.S. West Texas Intermediate (WTI) crude futures settled at $59.64 a
barrel, down 33 cents, or 0.6 percent.
The previous day, Brent broke through $67 for the first time since June
2015 and WTI rose above $60 a barrel for the first time since May 2015.
“The market continues to gravitate towards bullish news but today we
are seeing a little bit of profit-taking,” said Gene McGillian, manager of
market research at Tradition Energy in Stamford, Connecticut.
Prices briefly pared losses in post-settlement trade after industry
group American Petroleum Institute said U.S. crude stocks fell more than
expected last week.
On Tuesday, Libya lost around 90,000 barrels per day (bpd) of crude oil
supplies after a pipeline feeding Es Sider port was blown up. Repairs could
take a week but will not have a major impact on exports, the head of Libyan
state oil firm NOC told Reuters on Wednesday.
RBC Capital Markets analyst Helima Croft said in a note to clients that
political unrest ahead of national elections could further dent Libyan
production in the coming months.
Other supply disruptions of recent weeks included closure of Britain’s
largest Forties pipeline. On Wednesday, Forties was pumping at half its normal
capacity. Its operator was pledging to resume full flows in early January.
The Forties and Libyan outages together amount to around 500,000 bpd,
relatively small in a global market of about 100 million bpd.
“While supply impact is immaterial, it shows that with the market
structurally undersupplied and inventories continuing to draw, geopolitical
risk has now re-emerged as an important factor in day-to-day trading dynamics,”
analysts at Tudor Pickering Holt Energy Research said in a note.
Oil markets have tightened due to supply restraint led by the
Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC Russia.
Data from the U.S. Energy Information Administration (EIA) shows global oil
markets gradually came into balance by 2016 and started to show a slight supply
deficit this year.
The data implied a shortfall of 180,000 bpd for the first quarter of
2018.
Limiting OPEC and Russian efforts to prop up prices, U.S. oil
production has soared more than 16 percent since mid-2016 and is approaching 10
million bpd.
The EIA is due to publish the latest U.S. production figures on
Thursday.
News source : Reuters
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