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Crude Oil Stocks Set Record

Crude oil inventories jumped to a new record last week, according to the Energy Information Administration (EIA), causing prices on the futures market to decline. Since the beginning of 2017, inventories have increased 10 out of 11 weeks.

Oil inventories in the U.S. rose 50 million barrels to 533,110 million barrels since the first week in January, according to EIA’s report issued on March 22. Crude oil inventories at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose 1.4 million barrels, the EIA said.

Prices on the New York Mercantile Exchange dropped to around $47 in response to the news.

Speculators attributed the rise in stock to an increase in U.S. oil production and a rise in oil imports. However, worldwide supplies appear to be smaller than they were a year ago, while demand is picking up. Production from OPEC members has declined since January. Demand in two key countries – China and India – increased in February.

Declining oil production and increased demand on the international markets appear to have softened the blow to crude oil prices in the U.S. Brent crude, which is traded in London, closed above $50 a barrel for the first time since November 30, closing at $50.64 per barrel on March 22. Refinery runs rose 329,000 barrels per day as utilization rates jumped 2.3 percentage points to 87.4% of capacity, led by higher runs at Gulf Coast and Midwest refiners. Gasoline stocks fell 2.8 million barrels, compared with analysts’ expectations for a 2 million-barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 1.9 million barrels, versus expectations for a 1.4 million-barrel drop, according to EIA data.

Alex Mills is President of the Texas Alliance of Energy Producers.  The opinions expressed are solely of the author.

Weekly Outlook for Crude Oil

Crude Oil Futures – Weekly Outlook: March 13 – 17

© Reuters. Oil books a weekly loss of just over 9% amid glut concerns© Reuters. Oil books a weekly loss of just over 9% amid glut concerns

Investing.com – Oil futures settled at the lowest level since the end of November on Friday, booking a weekly loss of around 9% as concern over rising shale production and record-high U.S. crude inventories offset optimism that OPEC and its allies have been following through on their commitment to cut production.

The U.S. West Texas Intermediate crude April contract touched a session low of $48.31 a barrel on Friday, a level not seen since November 30. It was last at $48.49 by close of trade, down 88 cents, or about 1.8%.

The U.S. benchmark lost $4.84, or almost 9%, on the week, its biggest weekly drop in five months.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery slumped 82 cents, or about 1.6%, to settle at $51.37 a barrel by close of trade. The global benchmark fell to $51.14 earlier, its cheapest since November 30.

For the week, London-traded Brent futures recorded a loss of $4.53, or 8.1%, the fifth straight weekly decline.

Concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand pressured crude prices.

Data from oilfield services provider Baker Hughes on Friday revealed that the number of active U.S. rigs drilling for oil rose by 8 last week, the eighth weekly increase in a row. That brought the total count to 617, the most since October 2015.

Meanwhile, the U.S. Energy Information Administration said on Wednesday that crude supplies jumped by 8.2 million barrels last week to yet another all-time high of 528.4 million. It was the ninth straight weekly build in U.S. stockpiles, feeding concerns about a global glut.

Oil prices have been trading in a narrow $5 range around the low-to-mid-$50s over the past three months as sentiment in oil markets has been torn between rising stockpiles and increased shale production in the U.S. and hopes that oversupply may be curbed by output cuts announced by major global producers.

OPEC and non-OPEC countries made a strong start to lowering their oil output by almost 1.8 million barrels per day by the end of June, but so far the move has had little impact on inventory levels.

Kuwait is scheduled to host a ministerial meeting on March 26 comprising both OPEC and non-OPEC members to review compliance with the output agreement and to discuss whether cuts would be extended beyond June.

Elsewhere on Nymex, gasoline futures for April shed 2.4 cents, or about 1.5% to $1.600 on Friday. It ended down about 3.2% for the week.

April heating oil inched down 2.5 cents, or 1.7%, to finish at $1.503 a gallon, the lowest since November 30. For the week, the fuel lost roughly 5.7%.

Natural gas futures for April delivery rose 3.4 cents, or almost 1.2%, to $3.008 per million British thermal units. It posted a weekly gain of 6.4%.

In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.

Meanwhile, investors will keep an eye out for monthly reports from the Organization of Petroleum Exporting Counties and the International Energy Agency to gauge global supply and demand levels.

Traders will also continue to pay close attention to comments from global oil producers for further evidence that they are complying with their agreement to reduce output this year.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Tuesday, March 14

The Organization of Petroleum Exporting Counties will publish its monthly assessment of oil markets.

Later in the day, the American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.

Wednesday, March 15

The International Energy Agency will release its monthly report on global oil supply and demand.

The U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles.

Thursday, March 16

The U.S. government is to produce a weekly report on natural gas supplies in storage.

Friday, March 17

Baker Hughes will release weekly data on the U.S. oil rig count.

Crude Oil Prices Poised For A Breakout

 

Monday, Mar 6, 2017 3:14 pm +02:00

Short Term Strategies, Scalping, Price Action Analysis, and Risk Management


Talking Points:

  • Crude Oil Prices Poised For A Breakout
  • Daily Resistance Found at $55.67
  • Looking for additional trade ideas for crude oil & commodities markets? Read Our Market Forecast

Crude oil prices continue to trade off of yearly highs, but have failed to breakout significantly for the 2017 trading year. As such, traders continue to wait for a market catalyst to cause the commodity to breach key values of either support or resistance. Key news for this week includes the release of US employment data this Friday. Expectations for US NFP (Feb) is set at +190k, while the US Unemployment Rate is set to be released at 4.7%.

Technically the price of crude oil remains in an ongoing daily trading range, which is depicted below. Current daily resistance remains located at the January 3rd 2017 peak at $55.67. Alternatively, crude oil prices remain supported above the January 10th low at $51.34. As prices continue to ping between these values, traders may continue to reference these points for a potential market breakout.

Crude Oil Price, Daily Range with Average

Crude Oil Prices Poised For A Breakout(Created Using IG Charts)

Monday’s trading has prices in the middle of this $4.33 range. Currently short term momentum is pointed lower, with the price of crude remaining under the 10 Day EMA found at $53.63. If prices continue to decline this week, traders may look for crude oil to return to support and potentially breakout lower. In the event of a bearish breakout, traders may use a 1x extension of this range to find preliminary pricing targets near $47.01. Alternatively if prices remain supported, traders may look for crude oil to bounce and retest resistance at the standing 2017 high. In this scenario, bullish breakout targets for crude oil may be identified near $60.00.

In the event that prices fail breakout, traders may elect to trade the continuing range or look for opportunities elsewhere.

— Written by Walker, Analyst for DailyFX.com

A Global Glut is Ending

Crude oil rises after report shows drop in stockpiles

By Aaron Sheldrick | TOKYO

TOKYO Oil futures climbed nearly 1 percent on Thursday after data showed a surprise decline in U.S. crude stocks as imports fell, supporting the view that a global glut is ending.

The U.S. West Texas Intermediate crude April contract CLc1 had risen 50 cents, or 0.9 percent, to $54.09 a barrel by 0229 GMT.

Brent crude LCOc1 was up 51 cents, or 0.9 percent, at $56.35, although both benchmarks were still well within recent tight ranges.

Crude inventories fell by 884,000 barrels in the week to Feb. 17 to 512.7 million, compared with analyst expectations for an increase of 3.5 million barrels, data from industry group the American Petroleum Institute showed on Wednesday. [API/S]

That added to optimism earlier in the week when the Organization of the Petroleum Exporting Countries said a deal with other producers including Russia to curb output was showing a high level of compliance.

However, for prices to break out of their trading ranges, the market needs to see signs that OPEC inventories are falling, said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.

“It’s a battle between how quick OPEC can cut without shale catching up,” Nunan said, referring to U.S. drilling in shale formations that has shown an upsurge after prices rose this year. [RIG/U]

“What OPEC really has to do is get the inventories down,” he said.

Eleven non-OPEC oil producers that joined the OPEC deal have delivered at least 60 percent of promised curbs so far, OPEC sources said on Wednesday, higher than initially estimated.

In the United States, crude stocks at the Cushing, Oklahoma, delivery hub were down by 1.7 million barrels, while U.S. crude imports fell last week by 1.5 million barrels per day (bpd) to 7.398 million bpd, according to the API.

Official data from the U.S. Department of Energy’s Energy Information Administration (EIA) is scheduled to be released at 11 a.m. EST (1600 GMT) on Thursday, a day later than normal because of a holiday Monday. [EIA/S]

“All attention now shifts to the EIA crude inventory figures due out this evening in the U.S., with the market looking for an increase of 3.4 million barrels,” said Jeffrey Halley, senior market analyst at OANDA in Singapore.

“A big miss either way will set the short term direction for crude.”

(Editing by Richard Pullin and Joseph Radford)

Oil Rebounds

CNBC

Oil rebounds as US sanctions individuals and entities over Iran missile test

A worker stands next to a pump jack at an oil field Sergeyevskoye owned by Bashneft company north from Ufa, Bashkortostan, Russia.
A worker stands next to a pump jack at an oil field Sergeyevskoye owned by Bashneft company north from Ufa, Bashkortostan, Russia.

Oil prices recovered on Friday after the United States announced sanctions related to Iran’s ballistic missile test, and on signs big oil producers are cutting output.

The Trump administration on Friday rolled out new measures against 13 individuals and 12 entities following Tehran’s ballistic missile test.

U.S. President Donald Trump said “nothing is off the table” in dealing with the country, which has seen its oil exports surge after the lifting of international sanctions last year under the previous U.S. administration.

“The ‘trumperament’ of the new U.S. president is being tested by Iran and soon maybe also by Russia and China,” Olivier Jakob, managing director of consultancy PetroMatrix, said. “And that is adding some geopolitical support to crude oil.”

Shuaiba oil refinery south of Kuwait City, Kuwait.

Iran relationship a black swan for oil?   

Brent crude futures were up 27 cents at $56.83 a barrel by 1:07 p.m. ET (1807 GMT). Brent was on track to gain more than 2 percent on the week, its first significant weekly rise this year.

Front month U.S. West Texas Intermediate crude futures climbed 24 cents to $53.78 a barrel. For the week, the contract is up about 1 percent.

Prices held their gains after oilfield services firm Baker Hughes reported U.S. drillers added 17 oil rigs in the last week. The count has been recovering since June and now stands at 583 rigs, compared with 467 rigs last year.

Comments by Russian energy minister Alexander Novak that oil producers had cut their output as agreed under a deal with OPEC, also helped to support prices, analysts said.

Russia’s Novak said that Russian companies might cut oil production more quickly than required by its deal with Organization of the Petroleum Exporting Countries (OPEC) late last year.

He said that 1.4 million barrels per day (bpd) was cut from global oil output last month as part of the deal.

Prices briefly pared gains after the official start of the day session, reflecting pent-up selling pressure following the U.S. jobs report for January, according to John Kilduff, founding partner at energy hedge fund Again Capital.

“The energy market did not necessarily like the weak wage component of the employment report. Gasoline demand is already weak, due to higher prices, so that hurts energy disproportionately,” he told CNBC.

The U.S. Labor Department reported the United States added more jobs than analysts expected and the unemployment rate ticked up to 4.8 percent.

Here's how to play a rally in crude

Here’s how to play a rally in crude   

News that Norway restarted a field that produces 100,000 barrels per day also weighed on prices, Kilduff said.

Analysts said oil’s advance could run out of steam quickly. PVM Oil Associates noted the market “is sandwiched between supportive OPEC-led output cuts and the bearish impact of a resurgence in U.S. crude production.”

The prospect of more oil output from Nigeria and also from other non-OPEC producers such as Brazil also looms.

“Record speculative length threatens to trigger a sharp price fall as unease builds amid the ongoing wait for a conclusive upside breakout,” Commerzbank said in a note.

— CNBC’s Tom DiChristopher contributed to this report.

US crude settles at $52.63, down 1%, as more US drilling revives concern about oil glut

CNBC

A worker on a Nabors crude oil drill near New Town, North Dakota.
A worker on a Nabors crude oil drill near New Town, North Dakota.

Oil prices fell on Monday as news of another increase in U.S. drilling activity spread concern over rising output just as many of the world’s oil producers are trying to comply with a deal to pump less in an attempt to prop up prices.

The number of active U.S. oil rigs rose to the highest since November 2015 last week, according to Baker Hughes data, showing drillers are taking advantage of oil prices above $50 a barrel.

U.S. crude futures settled down 54 cents, or 1 percent, at $52.63. Global benchmark Brent crude oil prices were down 32 cents at $55.20 a barrel at 2:33 p.m. ET (1933 GMT).

Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg, said “three factors that have been weighing on prices: the stronger U.S. dollar, the steady increase in U.S. rig counts and the (latest OPEC compliance data).”

When it comes to oil, don't forget about demand: Expert

When it comes to oil, don’t forget about demand: Expert   

The Organization of the Petroleum Exporting Countries and other producers including Russia agreed to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017 to relieve a two-year supply overhang.

First indications of compliance to that deal show members have cut production by 900,000 barrels per day (bpd) in January, according to Petro-Logistics, a company that tracks OPEC supply.

That suggests only 75 percent of the targeted cuts would be met, said Tony Headrick, energy analyst at CHS in Minnesota.

“There’s an apprehension about how big that cutback is going to be versus the strength in U.S. crude production,” Headrick said. “That gap is a little narrower than folks had anticipated more recently.”

Tamas Varga, analyst at PVM Oil Associates in London, said the news was “not very encouraging” because it implied that only 75 percent of the OPEC production cut target was being met.

What's next for big oil?

What’s next for big oil?   

Oil prices have remained above $50 a barrel since producers agreed the deal in December, incentivising drillers in low-cost U.S. shale producing regions to ramp up activity.

“In our view the strong rise in U.S. shale oil rigs is a good thing because it will be needed over the next three years as non-OPEC, non-U.S. crude production continues to be hurt by the deep capex cuts both past and present in that segment,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo.

He estimated the U.S. rig count will continue rising at a rate of seven rigs per week over the first half of the year.

Analysts at J.P. Morgan said they saw a rise in oil prices beyond $60 a barrel in 2018 as unlikely.

“For prices to be supported above $60/bbl in 2018 would likely require continued OPEC output reductions that continue to tighten the market beyond Q3’17 – something that looks unlikely at this juncture,” they said in a report to clients.

Iran’s oil minister Bijan Zanganeh said on Monday he expected oil prices to remain at around $55 a barrel this yes, according to Mehr news agency.

US crude settles at $50.82, striking one-month low on strong dollar, OPEC cut doubts

CNBC

Oil prices fell about 2 percent on Tuesday, extending the previous session’s sharp sell-off, as the U.S. dollar strengthened and doubts over implementation of a global deal to cut output loomed.

Members of the Organization of the Petroleum Exporting Countries (OPEC), such as Saudi Arabia, appear to be reducing production under a global deal to rein in oversupply but it is unclear whether other big producers like Iraq will follow suit.

Iraq, OPEC’s second-largest producer, said it would raise crude exports from its main Basra port to an all-time high in February. The country’s southern oil exports in the first nine days of January held steady near a record high, despite the agreed start of OPEC cuts on Jan. 1, according to a source and loading data.

“The petroleum markets are consolidating at the lower levels reached in Monday trade after doubts emerged over the degree of compliance with OPEC production cuts as Iraqi exports remain high, as well as the more general pace of market rebalancing,” Tim Evans, energy futures specialist at Citigroup said in a note.

“Fresh reports that non-OPEC producers Russia and Kazakhstan have reduced output have produced little price reaction, with the failure to rally on bullish news suggesting that the market is overbought and vulnerable to a further downward correction.”

Oil markets to continue tightening: Expert

Oil markets to continue tightening: Expert   

U.S. light crude oil settled down $1.14, or 2.2 percent, at $50.82. That was its weakest daily closing level since Dec. 7.

Brent crude was last down $1.26 a barrel, or 2.3 percent, to $53.68.

Both crude contracts fell more than $2 a barrel, or around 4 percent, on Monday on doubts that the Organization of the Petroleum Exporting Countries (OPEC) and other key oil producers would cut output as promised to try to reduce a global oversupply.

The dollar rose on Tuesday, retracing early losses against a basket of currencies, and pressuring greenback-denominated oil as a stronger dollar tends to discourages buying by consumers holding other currencies.

Higher oil future prices through December encouraged investors to buy large volumes of crude contracts and many of these “long” positions are likely to be unwound unless the market stays strong, analysts and brokers said.

Supplies are also increasing in North America.

The U.S. Energy Information Administration revised its forecast for 2017 U.S. crude output, expecting growth of 110,000 barrels per day compared with last month’s forecast of a 80,000 bpd year-over-year decline.

 

JP Morgan: Remain constructive on EU oil

JPMorgan: Remain constructive on EU oil   

In the United States, energy companies last week added rigs for a 10th week in a row, extending the drilling recovery into an eighth month as crude prices remained at levels at which many U.S. drillers can operate profitably.

The average Canadian rig count for December 2016 was 209, up 36 from the 173 counted in November 2016, and up 49 from the 160 counted in December 2015, said Matt Stanley, a fuel broker at Freight Services International in Dubai.

“A 30 percent increase in Canadian rigs in a year … The bear in me is well and truly back,” Stanley said.

Weekly inventory data from industry group the American Petroleum Institute (API) is scheduled at 4:30 p.m. EST, with analysts forecasting a 1.2 million-barrel build in U.S. crude stocks in the week to Jan. 6.

Adding one-off supplies, the U.S. Department of Energy on Monday announced a sale for crude from its Strategic Petroleum Reserve (SPR), with bids for 8 million barrels of light, sweet oil due by Jan. 17.

— CNBC’s Tom DiChristopher contributed to this report.

Crude Oil Prices Brace for OPEC News

DAILY FX

Crude Oil Prices Brace for OPEC News, Gold Prices May Bounce

Monday, Jan 9, 2017 6:36 am +02:00

Fundamental analysis, economic and market themes


Talking Points:

  • Crude oil prices mark time, bracing for OPEC commentary
  • Gold prices snap 3-day win streak on US wage growth data
  • Cautious Fed-speak may cool bets on steep rate hike cycle

Crude oil prices are marking time in familiar territory as the spotlight turns back to OPEC and the implementation of its output reduction scheme. Cartel members will gather in Abu Dhabi for a variety of conferences throughout the week. Meanwhile, the group’s Secretary General Mohammad Barkindo is embarking on a three-day trip to Kuwait, which chairs the OPEC’s committee monitoring production cuts. This makes for significant headline risk and investors may be leery of taking big directional bets in the interim.

Gold prices snapped a three-day winning streak as after the December’s US employment data showed that on- wage growth jumped to a cyclical high of 2.9 percent. This suggested that the economy is running hotter than expected even before a would-be inflation boost form fiscal policies advocated by President-elect Trump. Not surprisingly, this reenergized bets on a steeper Fed rate cycle, sending US yields upward alongside the US Dollar and undermining the appeal of anti-fiat and non-interest-bearing assets.

 

FOMC policy speculation remains in focus from here as the markets parse scheduled comments from Eric Rosengren and Dennis Lockhart, Presidents of the Fed’s Boston and Atlanta branches respectively. A repeat of the cautious tone on offer in minutes from December’s meeting of the rate-setting committee may pour a bit of cold water on tightening bets, offering the yellow metal a bit of a lifeline.

See the schedule of upcoming webinars and join us LIVE to follow the financial markets!

GOLD TECHNICAL ANALYSISGold prices paused to consolidate gains but maintained their foothold above 1166.51, the 23.6% Fibonacci retracement. From here, a daily close above resistance in the 1193.55-99.80 area (38.2% level, May 30 low) exposes the 50% Fib at 1215.40. Alternatively, a break back below 1166.51 targets the 14.6% Fib at 1149.85.

Crude Oil Prices Brace for OPEC News, Gold Prices May Bounce

CRUDE OIL TECHNICAL ANALYSISCrude oil prices continue to consolidate in familiar territory. A daily close above the 14% Fibonacci expansionat 54.03 targets the 44.19-21 area (23.6% level, January 3 high). Alternatively, a reversal back below resistance-turned-support at 51.64 opens the door for a test of the 38.2% Fib retracementat 50.25.

Crude Oil Prices Brace for OPEC News, Gold Prices May Bounce

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

US crude settles at $53.99

US crude settles at $53.99, up slightly this week as traders parse signs OPEC is cutting output

CNBC

Oil traded higher on Friday as investors bought futures ahead of the weekend, but a strong U.S. dollar limited gains, as did lingering doubts about whether all OPEC producers would cut output in line with an agreement.

Trading was choppy, and market players cited end-of-week position-squaring and relatively low volumes during the first trading week of the year.

Brent crude futures, the benchmark for international oil prices, were up 11 cents at $57 per barrel at 2:35 p.m. ET (1935 GMT), having swung from a high of $57.47 to a low of $56.28.

In the United States, West Texas Intermediate (WTI) crude futures settled up 23 cents at $53.99 a barrel, recovering from a session low of $53.32 and off a high of $54.32.

The contract rose about 0.5 percent on the week, marking the fourth straight weekly gain.

US shale to kick in in second half of 2017: JPMorgan

US shale to kick in in second half of 2017: JPMorgan   

“There’s a lot of volatility, or at least changes in direction,” ABN Amro senior energy economist Hans van Cleef said. “People think the long-term trend is up, but after a gain of a few dollars, they take profit.”

The dollar gained broadly against major currencies after the U.S. non-farm payrolls report showed a slowing in hiring in December but an increase in wages, setting the economy up for further interest rate increases from the Federal Reserve this year.

A stronger greenback makes oil more expensive for holders of other currencies.

Top crude exporter Saudi Arabia and fellow Gulf members Abu Dhabi and Kuwait showed signs they were cutting production in line with an agreement by OPEC and other producers, yet market watchers have doubts about overall compliance.

Saudi Arabia’s state oil producer Saudi Aramco has started talks with customers globally on possible cuts of 3 percent to 7 percent in February crude loadings.

A Kuwaiti oil official said that country had also reduced production in line with the deal, and there are also reports of supply cuts from Abu Dhabi.

Energy CEO: We're in initial stages of a recovery

Energy CEO: We’re in initial stages of a recovery   

But there are still doubts about other producers’ compliance.

“There will be some countries who will cheat…we expect zero compliance from Baghdad… And we definitely do not expect the Kurds to join in, given that they are autonomous from the federal government,” Energy Aspects said in its 2017 oil market outlook, published this week.

Iraq Prime Minister Haider al-Abadi said this week the autonomous Kurdish region wasexporting more than its allocated share of oil. Iraq is the Organization of the Petroleum Exporting Countries’ second-largest producer.

Iran has sold more than 13 million barrels of oil that it had long held on tankers at sea, capitalizing on an OPEC output cut deal from which it is exempted to regain market share and court new buyers, according to industry sources and data.

In the past three months, Tehran has sold almost half the oil it had held in floating storage, which had tied up many of its tankers as it struggled to offload stocks in an oversupplied global market.

Oil markets to continue tightening: Expert

Oil markets to continue tightening: Expert   

National Iranian Oil Company (NIOC) is also negotiating with the Philippines over exporting four million barrels of crude per month to the country, Iran’s English-language Press TV quoted a statement published on Friday by the NIOC as saying.

Iran, OPEC’s third-largest oil producer, won special terms from the group’s production cuts agreed on Nov. 30 and may raise output slightly.

Overall supply from OPEC in December fell only slightly to 34.18 million barrels per day (bpd) from a revised 34.38 million bpd in November, according to a Reuters survey this week based on shipping data and information from industry sources.

U.S. energy companies this week added oil rigs for a 10th week in a row, bringing the total count up to 529, the most since December 2015, energy services firm Baker Hughes said on Friday.

US drillers pumped like crazy last week, and that’s a ‘major concern’ for OPEC

Oil outlook for 2017

Oil outlook for 2017   

Thanks, OPEC.

U.S. crude oil production surged by about 100,000 barrels a day last week, providing further evidence that American drillers are responding quickly to the higher prices that OPEC created by agreeing to curtail their own production.

The Organization of Petroleum Exporting Countries reached an agreement to cut production by 1.2 million barrels a day last month and got commitments from some nonmembers to 558,000 barrels a day in reductions this past weekend. Hopes for output limits had boosted prices ahead of the agreements.

American drillers were not among the nonmembers who agreed to cut. In the lower 48 states, they drove production to nearly 8.8 million barrels a day in the week through Dec. 9, according to the U.S. Energy Information Administration. That is up from about 8.7 million barrels a day the week prior.

To be sure, the weekly production figures are preliminary, and big jumps are not too rare. But a steadily rising four-week average for U.S. oil output points to an overall recovery. At 8.72 million barrels a day, the average was at its highest level since June.

Analysts warn that OPEC’s bid to balance an oversupplied market by cutting production could backfire if it causes oil prices to rise too much. Those higher prices could cause U.S. drillers sidelined by low oil prices to start pumping more oil.

The weekly jump in U.S. output is a “major concern” for OPEC members, said John Kilduff, founding partner at energy hedge fund Again Capital.

“This is exactly what several of them had been worried about. This deal gave new life to the shale industry,” he told CNBC. “OPEC’s going to have its hands full with them for a time.”

Recent hedging activity has allowed drillers to lock in prices for future deliveries of oil at $55 a barrel, a price that makes more of their acreage profitable, according to Kilduff, who has been bearish on oil prices and skeptical of OPEC’s ability to enforce production cuts.

The production surge follows an increase in the U.S. oil rig count of 21 rigs — the biggest one-week jump since a recovery in drilling activity began in June. Drillers have added a net 182 rigs since the count bottomed out at 316 rigs in May, according to data provided by oilfield services firm Baker Hughes.

The total U.S. rig count stood at 498 at last count, close the year-ago count of 524 rigs.