Oil prices rise on USA production declines, OPEC output cuts

Jan 10, 2018, 00:29
Oil prices rise on USA production declines, OPEC output cuts

Oil has held above $60 a barrel since late-December in NY, with U.S. crude stockpiles contracting and American oil drilling stalling out.

On January 9, Brent crude futures were at $68.11 a barrel, 33 cents, or 0.5 percent, above their last close.

"You're so long this market at this point, you could certainly get more interest at these levels", said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

Unrest in Iran, OPEC's third-largest producer, has lent support to prices this year although output and exports have not been affected.

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The American Petroleum Institute reports its weekly inventories numbers this afternoon, followed by the government's official report tomorrow morning.

According to Iran's oil ministry news service Shana, Bijan Namdar Zanganeh said "members of the Organization of the Petroleum Exporting Countries (OPEC) are not keen on increased Brent Crude prices to above 60 dollars per barrels because of shale oil".

OPEC has no formal target for oil prices. USA commercial crude inventories fell by 7.4 million barrels (MMBbl) in the week ended December 29, to 424.46 MMBbl, according to data from the Energy Information Administration.

"Led by USA production, particularly the Permian Basin, and now new oil sands projects in Canada, non-OPEC production is forecast to continue growing through the end of 2019", John Conti, the agency's acting administrator, said in a statement.

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"I am now on the lookout for bearish technical patterns to emerge on oil prices as I believe they will struggle to go north of $65-$75 per barrel given the above fundamental consideration", said Fawad Razaqzada, technical analyst for Forex.com.

Most recently, traders and oil market observers are waiting to see whether President Donald Trump on Wednesday extends US sanctions relief to Iran as part of the 2015 worldwide agreement to curb the Islamic Republic's nuclear program.

However, some analysts believe market participants are getting to optimistic, especially given expectations for an increase in US shale production.

Oil prices firmed on Monday after a dip in the number of United States rigs drilling for new production, with crude holding just below the highs of almost three years reached last week.

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