Breaking News
0

Oil Ends Higher; U.S. 2019 Supply Could Negate OPEC Cuts, EIA Hints

CommoditiesDec 11, 2018 03:00PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

Investing.com - Volatility is returning to oil, with daily swings of 2% to 3% likely, as traders and investors get caught up in countervailing themes such as production cuts and other supply disruptions versus fear of slowing growth and energy demand.

After settling up 2% on Friday on output cuts announced by OPEC and its allies, then slumping 3% on Monday on renewed anxieties over the U.S.-China trade war and Brexit, oil prices rose by more than 1% on Tuesday, supported by outages in Libyan supply.

U.S. West Texas Intermediate crude settled up 65 cents, or 1.3%, at $51.65 per barrel, after rising nearly 3% earlier in the day. With just three weeks to the end of 2018, WTI remains down about 15% on the year and some 32% lower from four-year highs of nearly $77 per barrel hit in early October.

Brent, the global benchmark for crude, rose by 20 cents, or 0.3%, to $60.17 per barrel by 2:45 PM ET (17:45 GMT). Brent is down almost 10% on the year and 30% lower from four-year highs of nearly $87 per barrel hit two months ago.

"Overall, flows remain limited in our view as discretionary trading is at a minimum as we approach year end as the market is unsure on whether to pay attention to the concept of less oil from OPEC and Canada, or pay attention to sagging demand possibilities due to what the market perceives as a global slowdown," said Scott Shelton, broker and analyst for ICAP (LON:NXGN) in Durham, N.C.

On the Libyan front, officials cited a production loss of 315,000 barrels per day (bpd) from the El Sharara oilfield, which was seized at the weekend by a local militia group. Separately, Libya's National Oil Company (NOC) reported an additional loss of 73,000 bpd at another oilfield, El Feel.

Offsetting that positive sentiment were remarks by Russian Energy Minister Alexander Novak that Moscow would only be able to reduce 50,000 to 60,000 bpd in January from its pledge at last week's OPEC meeting to cut some 228,000 bpd over the next six months.

More interesting than that was the latest forecast for U.S. oil production in 2019 from the Energy Information Administration. The EIA's Short-Term Energy Outlook put U.S. output for next year at a record high 12.1 million bpd on the average, versus the average of 10.9 million expected this year. The net increase of 1.2 million bpd would essentially account for all the supply OPEC and its allies planned to cut next year to shore prices up.

"If true, there goes your bullish story for oil from these cuts," said John Kilduff, partner at New York energy hedge fund Again Capital.

Oil prices initially soared last Friday after Russia and other non-OPEC oil producers offered to cut a cumulative 400,000 bpd on top of the 800,000 bpd that Saudi Arabia and the rest of OPEC planned to take off the market through June. But the rally faded by Monday on the notion that the cuts did not account for the tide of U.S. supply that could come in the next six months if prices recovered.

The EIA will publish on Saturday weekly supply-demand oil statistics on Wednesday, where it expected to announce a drawdown of nearly 3 million barrels for last week, analysts said.

Oil Ends Higher; U.S. 2019 Supply Could Negate OPEC Cuts, EIA Hints
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
Patrick Mueller
Patrick Mueller Dec 11, 2018 4:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
...ya think..?
Reply
0 0
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email