Crude Edges Down Ahead of US, OPEC Production Reports

18 January, 2018, 04:27 | Author: Julio Duncan
  • WTI Crude Oil

They include unprecedented high conformity levels among the 24 participating nations in terms of the production adjustments, strong oil demand growth, and slower than anticipated growth in USA tight oil supply.

Worldwide benchmark Brent crude futures LCOc1 last traded 29 cents higher at $US70.16 ($F141) by 1937 GMT, having risen to a high of $70.37 a barrel earlier in the session. The global benchmark hit a peak of US$70.37 on Monday, matching a high from December 2014 at the start of a three-year market decline. Earlier in the day, the price lost more than $1 to a low of $68.92. Prices have moved generally higher since the middle of last year, supported by a drain on the market surplus that dragged heavily on the sector three years ago.

"You still have some speculators that are aiming for prices going higher but you will also find the resistance from some producers that are hedging", said Olivier Jakob, managing director of Petromatrix, an oil research firm in Switzerland.

Money managers have raised the bullish positions in WTI and Brent crude futures and options to a record, according to data from the U.S. Commodity Futures Trading Commission and the Intercontinental Exchange.

In addition, trading was thin on Monday due to a holiday in the United States.

Commitment to output cuts led by the Organization of the Petroleum Exporting Countries is "stronger than ever".


Most analysts and market participants said oil is vulnerable to profit taking as hedge funds and money mangers have amassed a record number of bullish bets on U.S. crude.

OPEC and its allies including Russian Federation agreed in November to further extend the production cuts negotiated a year ago for up to the end of 2018, with a review period in late June.

The curbs have coincided with healthy demand and solid economic growth, and as a result the market has tightened, helping to push prices up more than 50 percent from June 2017.

Novak told reporters on Tuesday said he did not see the oil price as a leading indicator and that the balance between supply and demand in the market was more important.

“We see increasing upside risks to our $62 per barrel Brent and $57.5 per barrel WTI forecast for the coming months.”. "We believe the rally is likely to continue until March for certain until the winter demand subsides and clarity is reached on the production plans in the US", Icra said in a note on January 12.

One factor that in 2017 prevented crude prices from rising further was a surge in US production.

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