Oil falls below $65 as U.S. output soars, North Sea
supply restarts
Send a link to a friend
[February 08, 2018]
By Amanda Cooper
LONDON (Reuters) - Oil prices fell to their
lowest in six weeks on Thursday after data showed U.S. crude output had
reached record highs and the North Sea's largest crude pipeline reopened
following an outage.
A stronger dollar, on track for its biggest weekly rise since November
2016, was adding pressure by making it more profitable for holders of
other currencies to sell dollar-denominated assets such as oil.
Brent crude futures <LCOc1> dropped 58 cents to $64.93 a barrel by 1157
GMT, having hit a 2018 low of $64.77 earlier. U.S. futures <CLc1> fell
48 cents to $61.31 a barrel.
Brent futures have lost about 8 percent since reaching a four-year high
above $71 in late January.
"This is more a timely correction. I don’t believe it's going to come
significantly lower," PVM Oil Associates strategist Tamas Varga said.
Investors in crude are still sitting on one of the largest bullish
positions in history. Money managers own more 1 billion barrels of crude
oil through their holdings of U.S. and Brent futures and options.
Oil prices were dented by the restart of the Forties pipeline in the
North Sea, following an outage the previous day that had sent prices
higher when it was announced.
The pipeline, which carries around a quarter of all North Sea crude
output and roughly a third of Britain's offshore natural gas production,
shut on Wednesday for the second time in two months after a valve
closure at a Scottish facility.
[to top of second column] |
A pump jack operates at
a well site leased by Devon Energy Production Company near Guthrie,
Oklahoma, U.S., September 15, 2015. REUTERS/Nick Oxford/File Photo
The U.S. Energy Information Administration raised its 2018 average output
forecast this week to 10.59 million barrels per day (bpd), up 320,000 bpd from
its forecast a week earlier.
At 10.25 million bpd, U.S. output exceeds the previous record of 10.044 million
bpd in 1970 and overtakes Saudi Arabia, the biggest producer in the Organization
of the Petroleum Exporting Countries.
"It is now clear that oil prices in late January were too high to keep the oil
market balanced in the long term," Commerzbank analysts wrote. "This is because
U.S. oil production is now rising so sharply that there is a risk of renewed
oversupply if OPEC does not voluntarily renounce market share."
U.S. crude inventories <C-STK-T-EIA> rose 1.9 million barrels in the week to
Feb. 2, to 420.25 million barrels.
Chinese consumption of oil meanwhile is rising, as reflected by the surge to a
record 9.57 million bpd in imports in January, according to official customs
data.
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson
and Edmund Blair)
[© 2018 Thomson Reuters. All rights
reserved.] Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |