OIL PRICES: NOT ABOVE $70
Although analysts and traders have been warning of the risks of a downward price correction since the start of the year, they point out that overall market conditions remain strong, largely due to ongoing production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $63.34 a barrel at 0755 GMT, down 46 cents, or 0.7 percent, from their last settlement. WTI the day before rose to its strongest since late 2014 at $64.77.
Brent crude futures LCOc1 were at $68.97 a barrel, down 29 cents, or 0.4 percent, from their last close. Brent also marked a December-2014 high the previous day, at $70.05 a barrel.
Traders said relatively weak China December oil data had weighed on prices. China's crude oil imports in December eased to 33.7 million tonnes, or 7.97 million barrels per day, versus 37.04 million tonnes in November, customs data showed on Friday.
Meanwhile, its December oil products exports hit a record 6.17 million tonnes, as refiners churn out more fuel than even thirsty China can absorb.
This has contributed to a fall in Singapore refinery profit margins DUB-SIN-REF to below $6 per barrel this month, their lowest seasonal level in five years.
As a result, some refiners have already scaled back their output, reducing demand for feedstock crude.
An expected rise in U.S. oil production, currently at 9.5 million bpd, to above 10 million bpd soon has also weighed on prices, traders said.
Despite the lower prices on Friday, many analysts expect crude markets to remain firm this year, especially due to the OPEC-led production cuts.
"OPEC has acted successfully to reduce the inventory overhang and demand growth remains robust in the short term," said Sanjeev Bahl, analyst at Edison Investment Research in a 2018 outlook.
The production cuts started in January last year and are set to last through 2018.
"There is potential for oil prices to move higher as inventories normalize," Bahl said.
U.S. commercial crude oil inventories fell almost 5 million barrels in the week to Jan. 5, to 419.5 million barrels.
That's slightly below the five-year average of just over 420 million barrels.
Fuel price hedging company Global Risk Management said in its 2018 outlook that "the likelihood of elevated oil prices this year seems imminent", largely due to the ongoing supply cuts led by OPEC and Russia as well as political risk especially in Iran, Venezuela and Libya.
Taking into account price supportive and pressuring factors, a market survey of over 1,000 energy professionals conducted by Reuters in January showed crude oil price expectations clustered in a range of $60 to $70 per barrel for 2018.
"Oil market fundamentals for 2018 remain robust even if the upside to Brent prices from here is not especially clear," U.S. investment bank Jefferies said.
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U.S. FRB - Industrial production edged up 0.1 percent in July after rising at an average pace of 0.5 percent over the previous five months. Manufacturing production increased 0.3 percent, the output of utilities moved down 0.5 percent, and, after posting five consecutive months of growth, the index for mining declined 0.3 percent. At 108.0 percent of its 2012 average, total industrial production was 4.2 percent higher in July than it was a year earlier. Capacity utilization for the industrial sector was unchanged in July at 78.1 percent, a rate that is 1.7 percentage points below its long-run (1972–2017) average.
NPD - Preliminary production figures for July 2018 show an average daily production of 1 911 000 barrels of oil, NGL and condensate, which is an increase of 64 000 barrels per day compared to June.
GAZPROM NEFT - For the first six months of 2018 Gazprom Neft achieved revenue** growth of 24.4% year-on-year, at one trillion, 137.7 billion rubles (RUB1,137,700,000,000). The Company achieved a 49.8% year-on-year increase in adjusted EBITDA, to RUB368.2 billion. This performance reflected positive market conditions for oil and oil products, production growth at the Company’s new projects, and effective management initiatives. Net profit attributable to Gazprom Neft PJSC shareholders grew 49.6% year on year, to RUB166.4 billion. Growth in the Company’s operating cash flow, as well as the completion of key infrastructure investments at new upstream projects, delivered positive free cash flow of RUB47.5 billion for 1H 2018.
REUTERS - Front-month Brent crude oil futures LCOc1 were at $72.34 per barrel at 0648 GMT, down by 12 cents, or 0.2 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 23 cents, or 0.3 percent, at $66.81 per barrel.