Abu Dhabi: Oil prices recovered slightly last week due to shutdown of an oilfield in Libya but a rise in the US crude oil production could pose a challenge and disrupt the effectiveness of Opec- (Organisation of the Petroleum Exporting Countries) led output cut agreement in propping up prices, analysts said.
Opec and non-Opec producers led by Russia are restraining production by about 1.8 million barrels per day to prop up prices under a deal that is to expire at the end of this year. Opec has cut output by 1.2 million barrels a day and non-Opec producers by about 555,000 barrels per day.
“The oil markets continue to feel the pressure from prospect of rising US output. Figures from the EIA (Energy Information Administration) on Thursday indicated an unexpected fall in US crude stockpiles did provide relief and gains for oil. However, traders remain concerned by the US’ rising exports, which far outweigh oil imports, which if unchecked, could still have the power to disrupt Opec and Russia’s production cuts,” said Mihir Kapadia, chief executive officer of Sun Global Investments in London.
According to the latest information released by Baker Hughes, US rig Count is up 3 rigs from last week at 978, with oil rigs up 1 to 799 and gas rigs up 2 at 179.
Surging exports
“The latest weekly report from the US Energy Information Administration delivered a triple dose of bullish news with WTI surging to resistance at $63.15 per barrel. This followed a surprise counter-seasonal drop in stocks driven by surging exports while production was flat following a recent jump,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Oil prices rose on Friday to their highest in more than two weeks supported by the shutdown of an oilfield in Libya and positive comments from Saudi Arabia that output cut agreement is working in draining global stockpiles. The latest weekly report from the EIA about the drop in stocks in the US also helped oil prices to move upwards.
Global benchmark Brent was up 1.39 per cent to trade at $67.31 per barrel and the US crude West Texas Intermediate was up by 1.24 per cent to $63.55 per barrel on Friday.
