Oil prices continued their steady gains on Thursday amid news that US production reached 10 million barrels a day for the first time in almost 50 years. Meanwhile, the Organization of Petroleum Exporting Countries’ strong compliance with the supply cut helped offset the aforementioned news.
NYMEX crude for March delivery gained 8 cents, or 0.1 percent, to $64.81 barrels per day. It ended the previous session with a 0.4-percent increase.
London Brent crude for April delivery inched 10 cents up, or 0.1 percent, at $68.99. It finished the last session with a 3-cent gain.
US crude oil production in November reached more than 10 million barrels per day. This is the first time that it surpassed such milestone since 1970. According to the Energy Information Administration, this figure almost reached the all-time output record.
According to Tomomichi Akuta, who is a senior economist at Mitshubishi UFJ Research and Consulting in Tokyo, higher shale output is “definitely on the market’s mind” as oil prices rise.
OPEC’s oil output also swelled in January after it hit an eight-month low. Higher output from Nigeria and Saudi Arabia helped ward off further decline in Venezuela.
On the other hand, a survey from a news agency found out that the adherence of producers, who were included in the OPEC’s deal to curb oil supplies, jumped to 138 percent from 137 percent in December. This suggested that the commitment was not faltering even though oil prices hit their highest level since 2014.
“OPEC nations realize that lower production would buoy oil prices and that it’s better for them,” Akuta said.
Additionally, the survey showed that oil prices may not reach well above $70 per barrel this year. This is because the market has been caught between the production cuts led by OPEC and the surging US oil output.
On Wednesday, oil prices initially slumped following EIA’s data that showed the unexpected rise in the US crude inventories, which hit 6.8 million barrels last week after falling for 10 consecutive weeks. However, prices bounced back after a surprise 2 million-barrel drawdown in gasoline stocks, pushing up gasoline futures.
Distillate stockpiles like diesel and heating fuel lost 1.9 million barrels, compared to the expected 1.5 million-barrel drop, according to the EIA data.
Asia Gold Prices Gain amid Fed’s Upbeat Economy Views
On other news, gold prices in Asia also gained on Thursday as investors awaited signals of more hawkish view on rate in 2018 from the Fed.
Gold futures for February delivery rose 0.30 percent to $1, 347.10 a troy ounce, as shown on the Comex division of the New York Mercantile Exchange.
The Caixin/Markit China Manufacturing PMI for January was at 51.5, matching the predicted reading of 51.5 on Thursday. On Wednesday, the official manufacturing PMI came in at 51.3, below 51.5 and the 51.6 level in December.
The Federal Reserve left interest rate untouched by the end of its two-day policy meeting on Wednesday and kept the rates at 1.25 percent to 1.50 percent. It signaled that it would push its monetary policy tightening ahead, while the economic activity has been steadily rising. Inflation remained low, but it is expected to bounce back in the coming months.
“The committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong,” said the Fed in its monetary policy statement. “Inflation on a12-month basis is expected to move up this year and to stabilize around the Committee’s 2 percent objective over the medium term.”
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