Crude oil futures weakened slightly through the morning trading session in Europe but remained up from overnight settles on the back of a bullish set of US weekly crude stocks data, even as doubts linger about whether the OPEC/non-OPEC cuts agreed last week are enough to prevent global oversupply early next year.
At 1158 GMT, ICE February Brent crude futures were up 90 cents at $61.10/b, while the NYMEX January light sweet crude contract was up 98 cents at $52.58/b. The market is looking ahead to weekly numbers from the US Energy Information Administration on US crude stocks, after the American Petroleum Institute on Tuesday reported a larger than expected draw of 10.18 million barrels for the week ended December 7. That was far higher than the 2.6 million barrel draw forecast by analysts surveyed by S&P Global Platts.
Those figures also come on the back of the announcement of coordinated OPEC and non-OPEC output cuts starting in early 2019. However, long-running bearish trends have also dented the impact of the cut announcements, analysts warned.
“As much as this is providing a tailwind for oil prices, it should be noted that they are more or less back to the pre-OPEC meeting level,” Stephen Brennock, an analyst at PVM, said in a morning note. “This goes to show that fresh OPEC+ supply curbs have failed to meaningfully boost upside potential. Yet this should not come as a surprise. After all, the fundamental outlook in early 2019 is still plagued by a supply surplus and is therefore not conducive for a sustained price rally.”
Hurdles include the robust pace of US oil output growth, and questions about economic growth going into 2019, amid running trade disputes between US and China. On Tuesday, the EIA reduced its forecasts for WTI and Brent spot prices on the back of expectations of record global output, especially in the US, which it forecast would end the year as the world’s largest crude producer. Platts.com
