SINGAPORE:
Oil prices were stable on Thursday after posting strong gains late in
the previous session on the back of a drop in US crude inventories.
Another
rise in U. S. oil production, which is close to breaking through 10
million barrels per day (bpd) is capping crude prices as it undermines
efforts led by the Organization of the Petroleum Exporting Countries
(OPEC) and Russia to tighten the market through withholding output this
year and next. U. S. West Texas Intermediate (WTI) crude futures were at
$58.05 a barrel at 0126 GMT, down 3 cents from their last settlement.
Brent crude futures, the international benchmark for oil prices, were at
$64.58 a barrel, down 8 cents. Both crude benchmarks gained around 1
percent during the previous session.
Traders said
falling U. S. crude oil inventories were supporting the market. U. S.
crude inventories fell by 6.5 million barrels in the week to Dec. 15,
the Energy Information Administration (EIA) said on Wednesday.
Overall
crude stocks, excluding the U. S. Strategic Petroleum Reserve, fell to
436 million barrels, the lowest since October, 2015.The rebalancing of
supply and demand is a result of OPEC and Russian led voluntary
production cuts. Despite this, the energy minister of Saudi Arabia, the
world´s top crude exporter and OPEC´s de-facto leader, said it would
take more time to rein in the global supply overhang, which was created
by strong global production increases in the years up to 2015.
"We
expect the first few months of 2018 to be either flat or a build (in
inventories) as it is typically the case with the seasonality with the
oil market," Saudi Arabia´s energy minister Khalid al-Falih told Reuters
on Wednesday. OPEC´s and Russia´s efforts to rebalance markets and prop
up prices are being undermined by rising production in the United
States, which does not participate in the deal to cut. U. S. crude
production hit 9.79 million bpd last week, its highest since the early
1970s, the only time American production breached 10 million bpd.
This
brings U. S. output close to that of top producers Saudi Arabia and
Russia, which pump around 10 and 11 million bpd. Oil traders this week
eyed with interest the passing of a U. S. tax bill, which is seen to
weigh on crude prices in the longer term.
"The passage
of the U. S. tax bill is . . . a bearish long-term development for oil
and gas markets. The policies . . . are likely to reduce demand for gas
and oil and raise supplies . . . (as) the tax bill preserves renewable
energy tax credits, a tax credit for EVs (electric vehicles), and opens
up drilling in the Arctic National Wildlife Refuge," Barclays bank
said.