U.S. oil benchmark ends below $60 a barrel for first time in 2018

MarketWatch

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By

MyraP. Saefong

Markets/commodities reporter

NeandaSalvaterra

Oil futures fell for a sixth straight session on Friday, with the U.S. benchmark settling below $60 a barrel for the first time in 2018 to notch its biggest weekly loss in more than a year.

Data released Friday revealed the biggest weekly jump in the number of U.S. oil-drilling rigs since January 2017, contributing to concerns about a surge in U.S. production.

March West Texas Intermediate crude CLH8, -3.43% dropped $1.95, or 3.2%, to settle at $59.20 a barrel on the New York Mercantile Exchange. Prices saw their lowest finish since Dec. 22. For the week, it was down roughly 9.6%, which was the biggest such decline since January 2016.

April Brent crude LCOJ8, -3.24% the global oil benchmark, fell $2.02, or 3.1% to end at $62.79 a barrel on London’s ICE Futures exchange. Brent, which settled at its lowest since Dec. 13, retreated roughly 8.4% this week.

Baker Hughes BHGE, -3.64%  on Friday reported that the number of active U.S. rigs drilling for oil jumped by 26 to 791 this week. That marked a third straight week of increases and the largest weekly rise in more than a year.

This offers a “path for much more than a million barrels a day U.S. production increase this year, but prices will need to remain above $50,” said James Williams, energy economist at WTRG Economics. “Not a good Friday for OPEC.”

Until recently, oil prices have been buoyed by production cuts from the Organization of the Petroleum Exporting Countries and other large producers among other threats to supply.

However, OPEC member Iran also plans to raise its oil production in the next four years, according to a report from Reuters.

That has “added to market fears of an increase in global supplies,” said Mihir Kapadia, chief executive officer and founder of Sun Global Investments. “With reports suggesting China could be launching its crude oil futures contract next month, traders could be looking to the Far East to see how such a move could affect global prices.”

Oil-market fundamentals are also changing as recent increases in prices provided incentive for the U.S. to crank up output.

In a monthly report this week, the Energy Information Administration forecast record U.S. crude production of 10.59 million barrels a day this and 11.18 million barrels a day next year. A separate report from the agency also revealed that daily domestic output topped 10 million barrels a day last week—the highest such figure based on EIA records dating back to 1983.

Meanwhile, the downturn in the oil market has come amid a recent selloff in the equity markets, as investors there fret about the potential for higher inflation and central bank action. Stocks in Europe and Asia were on pace on Friday for their worst week in two years after a late slump Thursday pushed the Dow Jones Industrial Average DJIA, +1.38%  and S&P 500 SPX, +1.49%  into correction territory. U.S. stocks saw volatile Friday, with the Dow was set for a weekly loss of nearly 6%.

In other energy dealings, March gasoline RBH8, -3.66%  dropped 3.7% to $1.70 a gallon, with prices suffering a weekly loss of 9.2%, while March heating oil HOH8, -3.66%  lost 3.5% to $1.855 a gallon—down about 9.7% on the week.

March natural gas NGH18, -3.41%  fell 4.2% to $2.584 per million British thermal units, its lowest finish since late February 2017, for a weekly decline of 9.2%.

—Sara Sjolin contributed to this article

US oil prices extend gains on compliance with output cuts

CNBC

  • U.S. oil rose for a third day on Friday after a survey showed strong compliance with output cuts by OPEC and others.

A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil rose for a third day on Friday after a survey showed strong compliance with output cuts by OPEC and others including Russia, offsetting concerns about surging U.S. production.

Brent futures, the global benchmark, were up 19 cents, or 0.3 percent, at $69.84 a barrel by 0352 GMT.

U.S. West Texas Intermediate (WTI) crude was up 28 cents, or 0.4 percent, at $66.08 a barrel.

Production by the Organization of the Petroleum Exporting Countries (OPEC) rose in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela and strong compliance with a supply reduction pact, a Reuters survey showed.

OPEC pumped 32.4 million barrels per day (bpd) in January, the survey found, up 100,000 bpd from December. Last month’s total was revised down by 110,000 bpd to the lowest since April 2017.

Even so, adherence by producers included in the deal to curb supply rose to 138 percent from 137 percent in December, the survey found, suggesting commitment is not wavering even as oil prices hit their highest level since 2014.

“It underscores the commitment of the cartel, and their Russian partners, to keep a floor under the oil price,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

That is drawing investors’ focus away from the rise in U.S. production.U.S. crude output surpassed 10 million bpd in November for the first time since 1970, the Energy Information Administration said this week.

U.S. oil benchmark ends slightly lower

MarketWatch

Brent underpinned by pipeline outage in the North Sea

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By

SARASJOLIN

MARKETS REPORTER

WILLIAMWATTS

DEPUTY MARKETS EDITOR

West Texas Intermediate crude oil for January delivery CLF8, +0.44% the U.S. benchmark, declined 14 cents, or 0.2%, to end at $57.16 a barrel after earlier trading as high as $57.78.

Brent oil for February LCOG8, +0.25% the global benchmark, gained 18 cents, or 0.3%< to close at $63.41 a barrel.

The moves mirrored a mixed session on Friday, when WTI rose 0.5%, but Brent shed 0.1%.

There was no clear catalyst for the turn lower for WTI. Analysts noted that Nigerian oil workers suspended a strike, according to Bloomberg, agreeing to reopen negotations with management next month. Position squaring ahead of the expiration Tuesday of the January WTI contract may have played a role, traders said.

U.S. futures had already turned lower when the U.S. Energy Information Administration forecast crude production from seven major shale regions would grow by 94,000 barrels a day in January.

The earlier optimism for the U.S. benchmark came after Baker HughesBHGE, +2.54%  reported that the number of active U.S. rigs drilling for oil was down 4 at 747 last week, breaking a three-week string of rising rig numbers. A drop in rigs implies a slowdown in drilling activity, which is usually boost oil prices.

Brent was underpinned by the closure of North Sea Forties pipeline due to a power outage.

“The outage of the North Sea’s most important oil and gas pipeline is continuing to lend support,” analysts at Commerzbank said in a note.

“As a result, there is currently a lack of a good 400,000 barrels per day of Forties oil, the leading oil type in the Brent basket. This should preclude any fall in the Brent price for the foreseeable future,” they added.

In other energy products on Monday, gasoline RBF8, +0.33%  rallied 1.1% to $1.6725 a gallon, while heating oil HOF8, +0.28%  climbed 1.1% to $1.9252 a gallon.

Natural gas NGF18, -0.11%  jumped 5.1% to $2.745 per million British thermal units, rebounding from a nearly 10-month closing low set Friday. The bounce came after forecasts were revised to show much colder than previously expected temperatures across much of the U.S. in the latter part of this month and early January, according to analysts at TFS Energy.