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Oil Retreats on Rising US Output
Oil Retreats on Rising US Output

Oil Retreats on Rising US Output

Oil Retreats on Rising US Output

Oil prices fell on Friday, dropping from highs last seen in 2015, as soaring US production undermined a 10% rally from December lows that was driven by tightening supply.
Rising US output and weaker refined products demand weighed on the market, traders were quoted as saying by CNBC.
“The holiday demand surge that we get is in the rearview mirror,” said John Kilduff at Again Capital. “That, coupled with the rebound in US production, is helping to undercut some of the recent price strength.”
While product demand is up from a year earlier, robust stockpiles and a cold snap in the US could put a damper on demand for transportation fuels.
Traders said protests in Iran, the third-largest producer in the Organization of Petroleum Exporting Countries, had pushed prices higher.
West Texas Intermediate crude futures fell 57 cents to settle at $61.44 a barrel. WTI hit $62.21 the previous day, which was its strongest price since May 2015. Brent crude futures for March delivery fell 45 cents, or 0.7%, to $67.62 a barrel. The previous day it touched $68.27, also the highest price since May 2015.
“Crude oil traders are probably getting some demand concerns at the $60 threshold for WTI and especially the risk that Brent—the biggie globally—could hang out above $65 for too long,” said Richard Hastings, macro strategist at Seaport Global Securities.
“The US winter could disrupt some gasoline consumption and this would contribute to a slight weakness in various gasoline signals—and the oil markets never like that. All of this is the typical sentiment of being overextended.”
Oil prices have received general support from production cuts led by OPEC and Russia, which started in January last year and are set to last through 2018, as well as from strong economic growth and financial markets.
That has helped tighten markets. US commercial crude inventories fell by 7.4 million barrels in the week to Dec. 29, to 424.5 million barrels, according to data from the Energy Information Administration.
That is down 20% from peaks last March and close to the five-year average of 420 million barrels.

 

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