Oil prices rise on United States production declines, OPEC output cuts

Javier Stokes
January 10, 2018

February West Texas Intermediate crude was up 25 cents, or 0.4%, at $61.98 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, also closed at a three-year high, up $1.04, or 1.5%, to $68.82 a barrel. OPEC appears determined to end the global supply glut with disciplined output quotas in 2018.

A third OPEC source said market fundamentals did not justify the price rally.

Traders and analysts surveyed by The Wall Street Journal expect government data due Wednesday to show crude stockpiles declined on average by 2.5 million barrels in the week ended January 5, which would mark the eighth consecutive week of inventory draws if estimates are accurate.

Standard Chartered expects oil demand growth to outpace supply growth from non-OPEC countries in both 2018 and 2019, continuing to be the main supporter of prices, analysts wrote Tuesday.

Oil prices firmed on Monday after a dip in the number of United States rigs drilling for new production, with crude holding just below the highs of almost three years reached last week.

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NEW YORK, Jan 9 (Reuters) - Oil prices edged higher on Tuesday, with US crude touching its highest since December 2014, supported by OPEC-led production cuts and expectations that USA crude inventories have dropped for an eighth week. Economic collapse is leading to involuntary production cuts in Venezuela, another OPEC member. USA commercial crude inventories fell by 7.4 million barrels (MMBbl) in the week ended December 29, to 424.46 MMBbl, according to data from the Energy Information Administration. OPEC and 10 members outside the cartel agreed late last year to extend an accord to hold down crude output by almost 2% through the end of this year.

USA crude production was forecast to climb by 970,000 barrels per day (bpd) in 2018 and rise another 580,000 bpd to 10.85 million bpd in 2019, the EIA said in a monthly report that provided the agency's first outlook for next year.

Traders said the gains were due to a slight decline in the number of USA rigs drilling for new production.

"The U.S. oil price is now into a range that is anticipated to attract increased shale oil production", said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Futures advanced 0.5 percent on Monday, settling near $62 a barrel in NY.

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