Oil price is steady and heading for modest weekly rise

Oil prices were largely steady yesterday and looked set to finish the week with modest gains after losing almost 10% last week on concerns that an Opec production cut was failing to reduce a global supply overhang.

Crude traded in a narrow band this week, with Brent and West Texas Intermediate bouncing in a $2.50 range as investors weighed the impact of the first oil cut from Opec in eight years against rising US shale oil output and high inventories.

However, oil has not been able to reclaim the range that prevailed through most of 2017 before last week’s rout.

Instead of rebounding to $53 a barrel, US crude has remained stuck around $49. Analysts anticipate regaining the old levels may be difficult without significant drawdown in inventories.

The market even failed to rebound after Saudi Arabia minister Khalid al-Falih said on Thursday the cuts by the Opec and non-Opec producers could be extended beyond June if oil stockpiles stayed above long-term averages. 

Opec and non-Opec members agreed last year to cut output by a combined 1.8m barrels per day in the first half of 2017.

“Neither a weaker dollar nor Saudi talk of doing ‘whatever it takes’ to bring inventories down to healthier levels is inspiring much buying,” said Timothy Evans, analyst at Citi Futures in New York.

Saudi Arabia has cut output by more than its share under the November 2016 deal. Some ask whether it has the appetite to continue while several Opec and non-Opec states fail to comply and as shale production is expected to rise.

Reuters

© Irish Examiner Ltd. All rights reserved

Email Updates

Receive our lunchtime briefing straight to your inbox

More in this Section

Cork to Limerick road may get funds for upgrade

Balanced growth for all needed more than ever

Diageo secures go-ahead for its whiskey distillery

Opec nears output cut deal


Breaking Stories

Kinsale Bay Food Company predicts gluten-free industry will expand ’exponentially’

One in four firms reporting negative impacts of Brexit

An Post suffers pre tax losses of 15.6m for 2016

Tayto Park reveal plans for 250-bedroom hotel

Lifestyle

What I’ve learned from watching detective shows

A self-confessed shopaholic tries to give up buying clothes for a month

Lorraine Kelly never felt better as she heads for 60

LauraLynn provide numerous services to families and support that is 'absolutely fantastic'

More From The Irish Examiner