Five oil signals to watch as 2018 pits Opec against US shale

London

OIL traders are going to have their work cut out in 2018. The Organization of Petroleum Exporting Countries (Opec) and its allies are heading into the second year of supply cuts to wipe out the global oil glut, while rising US output is threatening those efforts. Geopolitical tensions also add a wild card to the market mix. As oil watchers seek to plot a course through the year ahead, they'll be paying close attention to signals ranging from timespreads to options contracts. Here are five key barometers to watch as 2018 unfolds:

WTI's discount to Brent closed at its widest level in more than two years on Tuesday as an explosion at an oil pipeline in Libya boosted the global benchmark. That came after Hurricane Harvey kept supplies locked in the US earlier in the year, providing the first trigger for a wider spread and bumper US exports. With shale growth driving forecasts of record US supply in 2018, that could lead to a further expansion in the spread. "If we get more shale and Canadian crude in the first half, and Opec cuts hold, then it should widen," said Richard Fullarton, founder of London-based commodity hedge fund Matilda Capital Management Ltd.