Published: 16:50 December 10, 2017
Abu Dhabi: Oil prices are expected to stick to current levels and eventually see a higher uptick later in 2018 due to greater likelihood for more oil to be taken out of the market following Opec output cut agreement, according to analysts.
Oil producing counties are cutting production by 1.8 million barrels per day to help lower global oil inventories and support oil prices. The original deal was to expire in March but it has been extended until the end of 2018.
Brent crude was trading at $63.40 (Dh232.68) per barrel, up by 1.93 per cent and West Texas Intermediate is at $57.36 per barrel, up by 1.18 per cent when markets closed on Friday.
“As Opec decided to extend output cuts, there is greater likelihood for more oil to be taken out of the market which should lead to higher probability for oil prices to stick to current levels and eventually see a higher uptick later in 2018,” John Sfakianakis, director of economic research at the Gulf Research Centre in Riyadh told Gulf News.
Markets will also be looking towards two key oil market reports that will be published this week that will throw light on the demand and supply equation as well as US oil production that has been rising steadily during the past thirteen months.
Last week US production hit a record of 9.7 million barrels per day.
“In the November update, Opec was looking for a 2018 deficit of 630,000 barrels per day while the IEA [International Energy Agency] saw a surplus 100,000 barrels per day. Whichever way the pendulum eventually swings will have a significant impact on market sentiment,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Data from oil services firm Baker Hughes shows rig count in the US going up by two to 931 last week with oil rigs up 2 to 751 and gas rigs unchanged at 180.
Monthly oil markets reports from Opec and the International Energy Agency will be published on December 13.