Markets

Supply discipline and demand to prop up oil prices in 2018

Supply discipline and demand to prop up oil prices in 2018

Brent futures were down 37 cents, or 0.6 percent, at $63.56 a barrel, while U.S. West Texas Intermediate crude settled 43 cents lower, or 0.7 percent at $56.74 per barrel.

This week, WTI broke above $60 a barrel for the first time since June 2015, while Brent breached $67 for the first time since May 2015.

Oil prices dipped today but stayed close to their highest in two and a half years, as data showed strong demand for crude imports in China and on increased refining activity in the United States that drew more crude from inventories. Brent crude futures-the worldwide benchmark-were also up, rising 45 cents or 0.7% to $66.61 a barrel, CNBC reported.

USA production is expected to rise to 9.2 million barrels per day (bpd) in 2017 and a record 10.0 million bpd in 2018 from 8.9 million bpd in 2016, according to federal energy projections this week. The US expects production to top 10 million barrels a day in the coming year. In the meantime, Brent crude oil price dwindled by six cents standing at 64.04 dollars per barrel. Inventories declined 1% week-over-week and 54.2 MMbbls or 11.15% year-over-year.

"The key driver for the oil market this year has been that the OPEC and Russian production cuts were introduced, complied with and extended", said Ric Spooner, a Sydney-based analyst at CMC Markets.

In worldwide markets, China has issued crude oil import quotas totaling 121.32 million tons for 44 companies in its first batch of allowances for 2018.

There are also expectations in the market that OPEC's next meeting on November 30 will agree to extend cuts beyond the current expiry date in March 2018. Output peaked at 9.6 million bpd in 1970.

Consultancy JBC Energy said Libyan pipeline outages had "no major impact on exports".


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