TODAY.AZ / Business

Oil prices down amid rising U.S. supplies

01 February 2017 [12:46] - TODAY.AZ

By Azernews


By Nigar Abbasova

Traders in the energy market are still keeping eye on two contradictory tendencies that put both upward and downward pressures on prices. Majority of producers are following the supply-cut deal being a catalyst for prices, while U.S. shale is responding to fifty-plus-dollar oil with swelling drilling activity.

The cartel’s decision to abandon its strategy of pursuing market share is currently benefiting U.S. shale, which increases the rig count. These two factors are largely neutralizing each other, and keep the price range between $50 and $60. 

Oil edged down on February 1, with gains being discouraged by ongoing high supplies despite OPEC-led efforts to prop up the market.

January price range extended to the second month of the year with Brent crude futures trading at $55.44 per barrel, 14 cents down, and U.S. West Texas Intermediate (WTI) standing at $52.74 a barrel, 7 cents down, Reuters reported. Both futures have traded within narrow ranges over the last two months.

Main deterrent came from the American Petroleum Institute's crude inventories data, which revealed a higher than expected increase of 5.8 million barrels, putting reserves to 488 million barrels.

The market watchdog’s forecast on oil prices also differ, with U.S. government’s top forecaster Energy Information Administration (EIA) predicting prices to remain below $60 per barrel even through 2018.

The EIA sees oil inventories continuing to rise until the middle of 2018, at an average rate of 0.3 million barrels per day in 2017, and extending to 2018 with a slight growth of 0.1 mbd.

Other major forecasters, in contrast, say the market would already be in a supply deficit in the first or second quarter of 2017.

The International Energy Agency (IEA) expects oil inventories to fall by 0.7 mbd in the first half of 2017, provided that OPEC complies with its production cuts.

URL: http://www.today.az/news/business/158206.html

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