By November 17, 2017 Read More →

Oil prices rise, but still on track for weekly drop

Oil prices

Oil prices rose on Friday, but traders are concerned about rising US production. Statoil photo.

Oil prices rise Friday after five straight days of losses

Oil prices rose on Friday after five straight days of losses on expectations that OPEC will extend its agreement to reduce output as well as the shutdown of the Keystone pipeline after a leak was reported on Thursday.

By 1:31 p.m. EST, Brent crude had risen $1.44 to $62.80/barrel and US WTI was up by $1.34 to $56.69/barrel.  The Canadian Crude Index had risen to $40.87.

Both Brent and US WTI had increased over two per cent on Friday, but oil prices were on track for their first weekly loss in six weeks on higher US production.

Despite some signs that Russia’s support for the OPEC supply cut deal may be waning, oil prices rose after the Saudi energy minister said the kingdom supported extending the output cuts well into 2018.  OPEC will meet on Nov. 30 in Vienna.

“Obviously, the comments gave us guarantee that the extension is going to happen and was a driving story overnight,” Phil Flynn, an analyst at Price Futures Group told Reuters.

“Globally, we’re coming against the backdrop of tightness in distillate inventories and strong global refinery demand. Those catalysts will continue to drive us higher.”

Russia is concerned that increased US production is undermining the OPEC supply deal.  Earlier this week Rosneft, a Russian oil company which is mostly owned by the Russian government, said an exit from the deal is a serious challenge, but added it was committed to the agreement.

On Thursday, TransCanada’s Keystone pipeline leaked about 5,000 barrels of oil in South Dakota.  The company has shut down the line and says it will release spill detains in the coming weeks.

Traders speaking with Reuters said the reduction in supply from the 590,000 barrels per day (b/d) pipeline added to the bullish sentiment.

However, oversupply fears loomed over oil prices in recent days after the US Energy Information Administration reported US output had reached a record high of 9.65 million b/d last week.

As well, the International Energy Agency said in a report released on Thursday that the US would account for 80 per cent of the global increase in crude production in the coming decade.

“Let’s assume that U.S. oil production continues its upward trajectory. They could very well be at 10 million bpd by the end of 2017,” Matt Stanley, a fuel broker at Freight Investor Services in Dubai told Reuters.

On Friday, Baker Hughes released data showing the US rig count had risen by eight, but, increase was in the number of gas rigs.  The oil rig count had remained steady at 738.  In Canada, the oil rig count rose by one to 109.

This time last year, there were 471 oil rigs operational in the US and in Canada, there were 100 oil rigs.

 

 

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