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Oil falls from 2015 highs as rally runs out of steam

January 09/2018

MOSCOW (MRC) — Oil prices fell on Wednesday after hitting a near two-and-a-half year high in the previous session as analysts said the rally was gradually running out of steam despite supply outages in Libya and the North Sea, said Hydrocarbonprocessing.

Brent crude futures dropped to USD66.27/bbl, down 1.15%, or 75 cents, at 1321 GMT after breaking through USD67 for the first time since May 2015 the previous day.

US West Texas Intermediate (WTI) crude futures were at USD59.53 a barrel, down 44 cents from their last settlement. WTI broke through $60/bbl for the first time since June 2015 in the previous session.

"This could now be the fourth year in a row when the period around the turn of the year offers a good opportunity to start fading the market," JBC Energy said in a note. JBC said it believed the market will gradually realize it had overshot: "We would have to argue that sometime over the course of January we will see a major turnaround."

It said prices could fall below $60/bbl sometime in February and could even test USD55/bbl. On Tuesday, Libya lost around 90 Mbpd of crude oil supplies from a blast on a pipeline feeding Es Sider port.

Repair of the pipeline could take about one week but will not have a major impact on exports, the head of Libyan state oil firm NOC told Reuters on Wednesday. The Libyan outage added to supply disruptions of recent weeks, which also included the closure of Britain's largest Forties pipeline.

On Wednesday, Forties was pumping at half its normal capacity and its operator was pledging to resume full flows in early January. The Forties and Libyan outages, which together amount to around 500 Mbpd, are relatively small in a global context of both production and demand approaching 100 MMbpd.

"The net global impact of the (Libyan) pipeline explosion is relatively small and we will not blow out of proportion the impact of the incident on the supply and demand picture," said Olivier Jakob from Swiss-based Petromatrix. He said the market could be supported by a US cold spell and expectations of greater heating oil consumption.

Oil markets have tightened significantly over the past year thanks to voluntary supply restraint led the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC Russia.

Data from the US Energy Information Administration (EIA) shows that following rampant oversupply in 2015, global oil markets gradually came into balance by 2016 and started to show a slight supply deficit this year. EIA data implies a slight supply shortfall of 180 Mbpd for 1Q 2018.

A major factor countering efforts by OPEC and Russia efforts to prop up prices is US oil production, which has soared more than 16% since mid-2016 and is fast approaching 10 MMbpd. 


mrcplast.com
Author:Anna Larionova
Tags:petroleum products, petrochemistry, Crude oil.
Category:General News
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