Oil Falls Below $60 a barrel as Inventories Stay High

By Christopher Johnson
Thursday, December 13, 2018

North Sea Brent crude oil fell below $60 a barrel on Thursday, under pressure from high global inventories and a smaller-than-expected drawdown in U.S. crude stockpiles.

"The energy complex is drifting lower as sellers continue to bask in the bearish afterglow of yesterday's (U.S.) stats," PVM Oil analyst Stephen Brennock said.

Brent crude was down 30 cents at $59.85 per barrel by 1425 GMT. U.S. light crude was 50 cents lower at $50.65.

Global oil supply has outstripped demand over the last six months, inflating inventories and pushing crude oil to its lowest in more than a year at the end of November.

U.S. crude inventories fell by 1.2 million barrels in the week to Dec. 7, disappointing some investors who had expected a decrease of 3 million barrels.

The Organization of the Petroleum Exporting Countries and other big producers, including Russia, said last week they would try to trim surplus supply, agreeing to cut production by a total of 1.2 million barrels per day (bpd).

That should be enough to give the market a supply deficit by the second quarter of next year, if OPEC and the other large producers stick to their deal, the International Energy Agency said in its monthly Oil Market Report on Thursday.

Oil demand growth is slowing, OPEC says.

OPEC said on Wednesday that demand for its crude in 2019 would fall to 31.44 million bpd, 100,000 bpd less than predicted last month and 1.53 million bpd below what it currently produces.

A combination of factors such as production cuts and output losses elsewhere is likely to keep markets tight in the first half of next year, Jefferies analyst Jason Gammel said.

"But ... U.S. (production) growth will almost inevitably re-accelerate in 2H19 as incremental pipeline capacity is installed in the Permian Basin. This means that by early 2020 the market could move back into oversupply," Gammel added.

The United States, where crude production has hit a record 11.7 million bpd, is set to end 2018 as the world's top oil producer, ahead of Russia and Saudi Arabia.

In a sign that China wants to lower trade tensions with the United States, the country made its first major U.S. soybean purchases in more than six months on Wednesday. Investors breathed a sigh of relief across broader stock markets. 

(Reuters, Reporting by Christopher Johnson in London and Koustav Samanta in Singapore; Editing by Elaine Hardcastle and Dale Hudson)

Categories: Shale Oil & Gas

Related Stories

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Yinson Production, “K” LINE Target Europe's CCS with FSIU and LCO2 Solutions

Yinson Production Closes $1B Investment to Drive Further Growth

CNOOC Starts Production at Offshore Field in South China Sea

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

Azeri SOCAR Plans New Agreements with Oil and Gas Majors

TPAO, SOCAR and BP to Ink Caspian Sea Oil and Gas Production Deal

Current News

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com