Oil prices fall as focus
shifts to U.S. output
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[January 27, 2017]
By Libby George
(Reuters) - Oil prices slipped on Friday, giving up gains from earlier
in the day, as the market shifted its focus toward production increases
in the United States from efforts by OPEC and other producers to support
prices by cutting supplies.
Brent crude futures <LCOc1>, the international benchmark for oil prices,
were trading at $55.80 per barrel at 1329 GMT, down 44 cents from their
U.S. West Texas Intermediate (WTI) crude futures <CLc1> were at $53.54 a
barrel, down 24 cents. U.S. crude is poised to gain nearly 2 percent on
"The market is really torn between a relatively healthy compliance from
OPEC and non-OPEC countries on the one side, and an increase in the U.S.
crude production on the other," PVM Oil Associates analyst Tamas Varga
Prices had risen during Asian business hours, though activity was low
due to the start of the Lunar New Year holiday in most countries of the
region, including China and Singapore.
The Organization of the Petroleum Exporting Countries and other
producers, including Russia, agreed to cut production by almost 1.8
million barrels per day (bpd) for the first half of 2017 to fight a
two-year supply overhang.
But U.S. oil production has been rising, with the International Energy
Agency forecasting total U.S. production growth of 320,000 bpd in 2017
to an average of 12.8 million bpd.
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A pump jack is seen at sunrise near Bakersfield, California October
14, 2014. REUTERS/Lucy Nicholson
Analysts said investors who bet on rising prices were taking profit in advance
of U.S. rig counts due later in the day from oilfield services provider Baker
Hughes, which could signal further increases in U.S. production.
Oil research firm PetroMatrix said the rig count data, "will be a weekend risk
as another surge will negatively impact the start of next week".
There were fundamental factors that impacted prices this week, such as gains in
Iran's monthly oil exports in February and resilient production in Libya. A
glitch in North Sea Buzzard crude production provided support.
But market participants warned of more volatility ahead as speculators were
reacting to even small developments in the physical markets.
"Given that speculative net long positions in Brent and WTI are already at a
record-high level, the correction potential is therefore growing all the time,"
Commerzbank analyst Carsten Fritsch said in a note.
(Additional reporting by Henning Gloystein; in Singapore. Editing by Jane
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