Oil prices down amid concerns over US output rise
Baku, Azerbaijan, Dec.5
By Leman Zeynalova – Trend:
World oil prices are going down on Dec.5 amid concerns over the US crude output rise.
The price for February futures of Brent crude oil fell by 0.35 percent to $62.23 as of 07:34 (EST).
This is while the price for January futures of West Texas Intermediate (WTI) oil dropped by 0.63 percent and stood at $57.11 per barrel.
Oil prices dipped amid concerns that the decision of OPEC and some non-OPEC countries to extend the oil output cut deal could lead to an increase in US production.
On Nov.30, OPEC announced that it, along with Russia and several other non-OPEC producers, had reached an agreement to extend its production deal for a further nine months. This would shift the expiration date of the agreement from March to the end of 2018. The agreement is on the same terms as those agreed in November last year.
After the announcement of this decision, Brent crude prices ticked up $63 per barrel.
“With the rollover in place and the same level of adherence through 2018, we expect a 1.8 million b/d year-on-year gain in world oil supply. With the extension, the supply and demand balance tightens in H2 2018 and helps lift prices in the second half of the year. We expect a pullback in H1 2018 because of resumption of oversupply in the first two quarters,” Ann-Louise Hittle, Vice President, Oils Research at Wood Mackenzie believes.
Without the extension, the larger increase in supply next year would lead to an implied stock build in each quarter of 2018 and put downward pressure on oil prices, she added.
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