Oil prices stable as talk of OPEC output cuts supports, but soaring US production drags

Singapore: Oil prices were stable on Thursday, supported by rumblings from within OPEC that production curbs may become necessary again to prevent a return of global oversupply. But soaring US crude output, which hit a record 11.6 million barrels per day (bpd) last week, kept a lid on prices.

US West Texas Intermediate (WTI) crude oil futures were at $61.75 per barrel at 0120 GMT, up 8 cents from their last settlement.

Front-month Brent crude oil futures were up 6 cents at $72.13 a barrel.

A group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as Russia decided last June to relax output curbs in place since 2017, after pressure from US President Donald Trump to reduce oil prices and make up for supply losses from Iran.

But with Iran sanctions now in place and oil still in ample availability, OPEC-led production cuts next year cannot be ruled out, two OPEC sources said on Wednesday.

“OPEC and Russia may use cuts to support $70 per barrel,” said Ole Hansen, head of commodity strategy at Saxo Bank.

“The introduction of US sanctions earlier this week against Iran failed to lift the market given the announcement that eight countries, including three of the world’s biggest importers, would receive waivers to carry on buying Iranian crude for up to six months,” Hansen said.

US crude oil output hits record 11.6 mln bpd.

Only way is up

Preventing oil prices from rising any further has been a relentless rise in US crude output, which hit a record 11.6 million bpd in the week ending 2 November, according to Energy Information Administration (EIA) data released on Wednesday.

That’s a threefold increase from the US low reached a decade ago, and a 22.2 percent rise just this year. It makes the United States the world’s biggest producer of crude oil.

That has impacted US crude inventories, which rose by 5.8 million barrels in the week ending 2 November to 431.79 million barrels, the EIA said.

Crude stocks moved back above their five-year average levels in October.