Oil Up On Saudi Commitment To Cut; U.S. Output Seen Rising

Reuters

CALGARY, Alberta, Jan 16 (Reuters) - Oil prices settled up on Monday, as Saudi Arabia's commitments to reducing production offset a report forecasting U.S. output would again rise this year.

The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut production by 1.2 million barrels per day (bpd) to 32.5 million bpd from Jan. 1 in an attempt to clear a global oversupply that has depressed prices for more than two years.

Russia and other key exporters outside OPEC have said they will also cut output.

Saudi Energy Minister Khalid al-Falih said on Monday the country will adhere strictly to its output reduction commitment, expressing confidence that OPEC's plan to prop up prices would work.

Benchmark Brent crude oil was up 41 cents a barrel, or 0.7 percent, at $55.86 and U.S. West Texas Intermediate crude rose 27 cents, or 0.5 percent, to $52.64 a barrel.

But expectations of rising oil output in the United States as well as the U.S. federal holiday on Monday capped price gains.

Goldman Sachs said it expects year-on-year U.S. oil production to rise by 235,000 bpd in 2017, taking into account wells that have been drilled and are likely to start producing in the first half of the year.

U.S. oil output is now at 8.95 million bpd, up from less than 8.5 million bpd in June last year and generally at levels in 2014, when overproduction sent the market into a tailspin.

Falih's words were also not entirely positive. While committing to the cuts, he had also said producers are unlikely to extend their agreement to cut oil output beyond six months, especially if global inventories fall to the five-year average.

"We don't think it's necessary given the level of compliance," Falih said at an industry event in Abu Dhabi. "My expectations (are) ... that the rebalancing that started slowly in 2016 will have its full impact by the first half."

Investors have doubted that OPEC and its allies can trim output enough to push up prices.

Russian oil and gas condensate production averaged 11.1 million bpd for Jan. 1-15, two energy industry sources said on Monday, down only 100,000 bpd from December. Russia has committed to a 300,000-bpd cut during the first half of 2017.

"Cuts by OPEC and non-OPEC countries have just started and it will take some time for them to filter through," said Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo.

"We do not really expect the oil price to strengthen much more in the first quarter of 2017."


12

View Full Article

Copyright 2017 Thomson Reuters. Click for Restrictions.

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
john weaver | Jan. 17, 2017
OPEC down US up. production remais the same so does the price


Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE



Most Popular Articles

From the Career Center
Jobs that may interest you
Sales Representative_Midland
Expertise: Pipeline Services|Sales|Well Servicing & Testing
Location: Midland, TX
 
Key Account Manager ADI
Expertise: Sales
Location: Cleveland, 
 
Chief Financial Officer
Expertise: Accounting|Executive|Financial Audit
Location: Houston, TX
 
search for more jobs

Brent Crude Oil : $52.99/BBL 0.11%
Light Crude Oil : $50.27/BBL 0.33%
Natural Gas : $3.16/MMBtu 0.94%
Updated in last 24 hours