Oil Prices See Modest Gains; Downside Pressure Remains
February 26 2017 - 10:35PM
Dow Jones News
By Jenny W. Hsu
Crude futures drifted marginally higher in Asia Monday, but
trading was largely tepid as investors saw little reason to rush
back to the market.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in April traded at $54.11 a barrel at 0258 GMT, up
$0.12 in the Globex electronic session. April Brent crude on
London's ICE Futures exchange rose $0.18 to $56.17 a barrel.
"Oil traders were like rabbits in the headlight this morning as
they are unsure of the short term direction of the market," said
Michael McCarthy, chief strategist at CMC Markets.
Oil prices have been facing strong resistance at the high $50s,
frustrated by the steady increase in U.S. oil production. Last
week, the number of active oil rigs in the U.S. rose by another
five to a total of 602, according to oil-field service company
Baker Hughes.
The climb in oil rigs count comes at a time when U.S. production
is nearly at a one-year high. In the week ended February 17, U.S.
shale producers pumped 9 million barrels a day, the highest level
since April.
Assuming the U.S. oil rig count stays at current levels, oil
production there would see an on-year increase of 435,000 barrels a
day in the fourth quarter this year across the Permian, Eagle Ford,
Bakken and Niobrara shale plays, said Goldman Sachs.
The expected increase in U.S. oil output is "hardly a surprise"
as American producers are taking advantage of the rising prices due
to the ongoing production cuts undertaken by a group of non-U.S.
producers, said Mr. McCarthy.
The Organization of the Petroleum Exporting Countries and almost
a dozen other oil producing nations such as Russia, reached an
agreement in December to slash their output by 1.8 million barrels
a day in order to eliminate at least 2% of global oil supply.
Though the current pace of U.S. growth is still insufficient to
derail OPEC's plan, U.S. shale producers are seen springing back to
the oil patches to capitalize on the rising prices, said Stuart
Ive, a client manager at OM Financial.
For this week, oil traders will be eyeing the weekly U.S. crude
inventories and production report as well as the China's February
manufacturing figures as a gauge for global oil supply and demand.
Both data are due to be released on Wednesday.
Nymex reformulated gasoline blendstock for March--the benchmark
gasoline contract--fell 17 points to $1.5131 a gallon, while March
diesel traded at $1.6388, 16 points lower.
ICE gasoil for March changed hands at $496.00 a metric ton, up
$1.50 from Friday's settlement.
Write to Jenny W. Hsu at jenny.hsu@wsj.com
(END) Dow Jones Newswires
February 26, 2017 22:20 ET (03:20 GMT)
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