Oil prices settle down slightly on more supply in US and abroad

OIL prices settled lower on Tuesday (Jan 23) as traders focused on rebounding crude output in parts of the United States, along with rising supply in Libya and Norway, rather than risks to supply posed by conflict in Europe and the Middle East.

Brent crude settled at US$79.55 a barrel, losing 51 US cents, or 0.6 per cent. US West Texas Intermediate crude settled at US$74.37 a barrel, shedding 39 US cents, or 0.5 per cent.

In North Dakota, the third-largest oil-producing US state, some oil output came back online after shutting because of extreme cold, the state’s pipeline authority said. However, output was still down as much as 300,000 barrels per day (bpd)  .

Persistent weakness in US petrol demand has also hit oil prices, said John Kilduff, partner at Again Capital.

While US crude stocks dropped by 6.67 million barrels last week, petrol inventories jumped by 7.2 million barrels, according to market sources citing American Petroleum Institute figures. Official US government data is due on Wednesday.

Rising production elsewhere further pressured prices.

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Norway’s crude production rose to 1.85 million bpd in December, up from 1.8 million bpd the previous month and beating analysts’ forecasts of 1.81 million bpd, according to the Norwegian Offshore Directorate.

In Libya, production at the 300,000 bpd Sharara oilfield restarted on Jan 21 after the end of protests that had halted output since early this month.

Geopolitical uncertainty limited losses.

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Oil rises 2% on supply disruptions in Russia, US

“You’ve got the geopolitical pressures that aren’t enough to really rally the oil market, but they’re enough to keep the market from bottoming out of the range,” said Bob Yawger, director of energy futures at Mizuho Bank.

Crude prices rose by around 2 per cent on Monday after a Ukrainian drone strike on Novatek’s Ust-Luga Baltic fuel export terminal near Russia’s second city St Petersburg raised supply concerns.

In the Middle East, tensions rose after US and British forces carried out a second joint round of strikes on Houthi positions in Yemen. REUTERS