«The Economist» from Riyadh
The US crude prices fell yesterday. These are extending losses for the fourth day as Asian stocks continued to fall as selling in the equity markets continued to push the price of crude. It is especially after frequent reports of the US intention to impose tariffs on imports of steel and aluminum, which raised fears of a trade war.
According to Reuters, Brent crude fell to $ 63.81 a barrel, after most of the session remained slightly higher; while the contract was revised down 1.4 percent on Thursday to a two-week low. Brent recorded a weekly fall of 5.2 percent, while the WTI fell 11 cents, 0.2 percent, to $ 60.88 after hitting a two-week low of $ 60.18 last Thursday. It's the first monthly loss in February for the first time in six months.
By the end of February, the benchmark crude was close to its highest level since December 2014, with Brent crude at $ 69.65 a barrel and WTI at $ 65.80 a barrel.
However, by the end of last month (on February 28) the US crude fell 4.6 percent, after six straight months of gains. Brent crude was $ 66.38 a barrel, while the US WTI was about $ 62.69 a barrel.
Sources in the sector said that the drop in prices is also due to the sale of profit at the end of the month after oil rose to the highest level in three weeks earlier this week. However, oil remains under pressure as the dollar index rises to a five-week high.
Last week, oil prices were affected by worries about a global economic slowdown after China announced factory production growth in February, which was the lowest since July 2016. Companies were also affected by the Lunar Week holiday in China.
In Japan, the world's third largest economy, industrial production in January fell to its lowest level since the devastating earthquake of March 2011, which highlights the weak demand and stockpiling.
Oil is under strong pressure from the US oil production acceleration, a recovery in the value of the dollar, as well as rising inventories and crude mining platforms in the United States.
A survey showed that oil market analysts expect crude prices to rise at a steady pace this year but remain limited because of the increase in the US crude oil production and supply constraints that imposed by the Organization of the Petroleum Exporting Countries (OPEC).
The survey, which included 37 economists and analysts, showed that Brent crude was expected to average $ 63 a barrel this year, slightly higher than a previous survey of $ 62.37 per barrel.
"The level of OPEC's commitment to agreed production cuts and the pace of growth of the oil production are expected to be the key price drivers in 2018," said Ashley Petersen of Stratus Advisors Energy Consultancy.
She added, "Prices are likely to be more volatile in 2018 than in 2017 due to negative sentiment on the pace of US growth." The US production could exceed 11 million barrels per day this year as the production already approaches a record high of more than 10 million barrels per day. Oil has been under the US production's pressure after rising there to a new record high. The monthly report of the Department of Energy Information showed that the volume of oil production in the United States amounted to 10.057 million barrels per day last month, surpassing the record level of the 1970s. The highest recorded record for oil production in the United States of 10.044 million barrels per day in February 1970. Crude stocks also put pressure on prices, rising by 3 million barrels in the week ending February 23 to 423.5 million barrels.
Kalin Berch, an analyst at Economist Intelligence Unit, stated, "The fact that the oil market is dominated by a large number of private companies that are not subject to coordination, where many of which benefit from lower production costs than producers in other regions. It means that the United States will remain a major player in the foreseeable future."
At the same time, figures for the head of OPEC research this month showed that the Organization is close to achieving its goal of reducing oil stocks in industrialized countries to an average of five years.
Last week, Saudi Arabia said it hoped that OPEC and its allies could ease production constraints next year and creates a permanent framework for oil market stability after the end of the OPEC-Russia-led autonomy agreement. The data show that Russia's oil output is stable less than 10.95 million barrels per day cut in February, unchanged from January levels.
