Jan. 25 (UPI) — Crude oil prices moved from a bearish to a bullish sentiment on Wednesday as the market faces competing production trends between OPEC and North America.
Crude oil prices have moved in wide swings for much of January amid competing trends on production. Members of the Organization of Petroleum Exporting Countries are showing they’re committed to trimming output in a managed fashion in an effort to offset supply-side strains. That’s brought positive momentum for crude oil prices, but also improved the economics from U. S. shale oil producers that helped contribute to the oversupply in the first place.
A note from broker PVM finds the oil market is in a “tug of war” between positive support from OPEC compliance and negative support from U. S. shale. S&P Global Platts reported this week there was a bullish sentiment settling in, but markets turned south early Wednesday after the American Petroleum Institute reported an increase in U. S. crude oil inventories of 2.9 million barrels.
Some of the supply in the United States may be a response to refiners preparing for seasonal maintenance.
In a volatile market, even short-term supply-side pressures are enough to undercut a rally. Brent crude oil prices were down about 0.7 percent a half hour before the start of U. S. trading to $55.02 per barrel. West Texas Intermediate, the U. S. benchmark price for oil, was down 0.8 percent to $52.77 per barrel.
Overseas, Libya reported that it may be courting foreign investors after signaling its export arteries were open. Mustafa Sanalla, the chairman of the Libyan National Oil Corp., said a target for this year was set at 1.3 million barrels per day, after industry sources reported 608,000 bpd from Libya in December.
“While the improving outlook for the U. S. oil patch may be grabbing all the headlines, other producers from outside the oil cartel are also poised to register output gains,” Stephen Brennock with PVM said in an emailed note. “This increase in activity is expected to be more muted than that in U. S. shale oil plays but it nevertheless represents a thorn in the side of OPEC’s ambitions to normalize bulging global oil stockpiles. “
