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Oil prices rise on data of Baker Hughes

Oil prices rise on data of Baker Hughes

The ongoing outage of the Forties pipeline, which carries North Sea oil to Britain, was the main price driver, traders said.

US West Texas Intermediate (WTI) for February delivery added 0.5 percent to $57.66.

In the United States, energy companies cut rigs drilling for new production for the first time in six weeks, to 747, in the week to December 15, energy services firm Baker Hughes said on Friday. At the same time oil drilling rigs were reduced by 4, or by 0.5 percent to747 units. "There is still no reliable information about how long the fix work will last and when the pipeline will go back into operation", Commerzbank said on the Forties outage, adding "this should preclude any fall in the Brent price for the foreseeable future". Earlier, production at the Forties field was stopped due to unplanned repairs.

FPS provides almost 40 percent of the UK North Sea's oil and gas production through 85 fields to the British mainland.

On the other side, The International Energy Agency (IEA) in its monthly oil market report, published on Thursday, revised upward its projection for USA oil production, warning that total supply growth could exceed demand growth in the months ahead. At the same time, traders point to the absence of significant factors that could push oil prices up or down. Non-Opec output, led by the U.S., will rise by 630,000 bpd in 2017, followed by an increase of 1.6 million bpd during 2018.

IEA's monthly OMR was bearish for a short-term, as they see rising USA supplies likely moving oil market into a supply surplus in H1 2018 by 200,000 barrels per day (bpd) before reverting to a deficit of about 200,000 bpd in H2 2018, making 2018 a closely balanced market, and likelihood of better price performance in letter half of next year.

However, even with shale explorers reducing the number of rigs, drilling activity is still higher than previous year, when only 510 rigs were operational and when the nation's domestic output jumped back almost 16 percent since the current decline in mid-2016 to an overall of 9.78 barrels per day (bpd).

In November 2016, the OPEC summit was held in Vienna, where OPEC members reached an agreement on reducing oil output by 1.2 million barrels per day. Domestic crude oil production in the lower 48 states increased by 2.9% from October and was 9.5% higher than November 2016 at more than 9.1 million bpd. Following the meeting, was signed an agreement to reduce oil production by a total of 558,000 barrels per day starting from January 2017.

"We expect a reversal of the recent spike in Dated Brent crude price over the next few months, driven by our estimated 0.2 mn bpd increase in global oil inventories during first half of 2018, based on seasonally weak global oil demand, rising growth in non-Opec supply and stable Opec production around 32.5mn bpd", said Kotak Securities.

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