OIL PRICE: BELOW $64 YET
Signs that booming U.S. crude output growth may be slowing also supported crude prices, although the 2018 outlook still points to ample supply despite production cuts led by OPEC.
Brent crude futures LCOc1, the international benchmark for oil prices, were at $63.72 a barrel at 0821 GMT, up 49 cents, or 0.8 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $57.70 a barrel, up 40 cents, or 0.7 percent.
The higher prices came on the back of a strike by Nigerian oil workers and the ongoing North Sea Forties pipeline system outage, which provides crude that underpins the Brent benchmark.
North Sea operator Ineos declared force majeure on all oil and gas shipments through its Forties pipeline system last week after cracks were found.
"The force majeure ... is acting as a major prop for crude," said Sukrit Vijayakar, director of energy consultancy Trifecta.
In Nigeria, the Petroleum and Natural Gas Senior Staff Association of Nigeria, whose members mainly work in the upstream oil industry, started industrial action on Monday after talks with government agencies ended in deadlock, potentially hitting the country's production and exports.
"Oil prices are getting a bounce... as the Nigerian oil union talks have hit an impasse and will begin strike action," said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA.
In the United States, energy companies cut rigs drilling for new production for the first time in six weeks, to 747, in the week ended Dec. 15, energy services firm Baker Hughes said on Friday.
Despite the dip in drilling, activity is still well above this time last year, when the rig count was below 500, and actual U.S. production has soared by 16 percent since mid-2016 to 9.8 million barrels per day (bpd).
This means U.S. output is fast approaching that of top producers Saudi Arabia and Russia, which are pumping 10 million bpd and 11 million bpd respectively.
The rising U.S. output also undermines efforts by the Organization of the Petroleum Exporting Countries (OPEC), which is de facto led by Saudi Arabia, and a group of non-OPEC producers including Russia to withhold production to tighten the market and prop up prices.
Largely because of rising shale output from the United States, the International Energy Agency said global oil markets would show a slight supply surplus of around 200,000 bpd during the first half of 2018.
Data from the U.S. Energy Information Administration showed a similar surplus for that period and still indicates a supply overhang of 167,000 bpd for all of 2018.
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.