London — Oil prices slipped on Monday, pressured by the
doubt that large oil producers will reduce production as promised and on
the expectation that US production would increase again this year.
Benchmark Brent crude oil was down 10c a barrel at $55.35 by 9.15am GMT and US light crude fell 10c to $52.27.
Oil cartel Opec has agreed to cut production by 1.2-million barrels a day to 32.5-million barrels a day from January 1 in an attempt to clear global oversupply that has depressed prices for more than two years.
Russia and other key exporters outside Opec have said they will also cut output.
But global oil production remains high and, with inventories near record levels in many areas, investors doubt that Opec and its allies can trim output enough to push up prices.
"Cuts by Opec and non-Opec countries have just started and it will take some time for them to filter through," said Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo.
"We do not really expect the oil price to strengthen much more in the first quarter of 2017."
Saudi Arabian Energy Minister Khalid al-Falih said on Monday that Opec and non-Opec producers were unlikely to extend their agreement to cut oil output beyond six months.
"We don’t think it’s necessary given the level of compliance," Falih said. "My expectations [are] ... that the rebalancing that started slowly in 2016 will have its full impact by the first half."
Russian oil and gas condensate production averaged 11.1-million barrels a day for January 1-15, two energy industry sources said on Monday, down only 100,000 barrels a day from December. Russia has committed to a 300,000 barrels a day cut during the first half of 2017 as a part of the global deal with Opec.
Rising US oil output is also preventing crude from climbing further.
Goldman Sachs said it expected year-on-year US oil production to rise by 235,000 barrels a day in 2017, taking into account wells that had been drilled and were likely to start producing in the first half of the year.
US oil output is now at 8.95-million barrels a day, up from less than 8.5-million barrels a day in June last year and at similar levels to 2014, when overproduction sent the market into a tailspin.
Reuters /BDlive
Benchmark Brent crude oil was down 10c a barrel at $55.35 by 9.15am GMT and US light crude fell 10c to $52.27.
Oil cartel Opec has agreed to cut production by 1.2-million barrels a day to 32.5-million barrels a day from January 1 in an attempt to clear global oversupply that has depressed prices for more than two years.
Russia and other key exporters outside Opec have said they will also cut output.
But global oil production remains high and, with inventories near record levels in many areas, investors doubt that Opec and its allies can trim output enough to push up prices.
"Cuts by Opec and non-Opec countries have just started and it will take some time for them to filter through," said Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo.
"We do not really expect the oil price to strengthen much more in the first quarter of 2017."
Saudi Arabian Energy Minister Khalid al-Falih said on Monday that Opec and non-Opec producers were unlikely to extend their agreement to cut oil output beyond six months.
"We don’t think it’s necessary given the level of compliance," Falih said. "My expectations [are] ... that the rebalancing that started slowly in 2016 will have its full impact by the first half."
Russian oil and gas condensate production averaged 11.1-million barrels a day for January 1-15, two energy industry sources said on Monday, down only 100,000 barrels a day from December. Russia has committed to a 300,000 barrels a day cut during the first half of 2017 as a part of the global deal with Opec.
Rising US oil output is also preventing crude from climbing further.
Goldman Sachs said it expected year-on-year US oil production to rise by 235,000 barrels a day in 2017, taking into account wells that had been drilled and were likely to start producing in the first half of the year.
US oil output is now at 8.95-million barrels a day, up from less than 8.5-million barrels a day in June last year and at similar levels to 2014, when overproduction sent the market into a tailspin.
Reuters /BDlive
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