Oil dips on US output increase

LONDON, January 19, 2018 – Crude oil prices remained under pressure on Friday, as an increase in U.S. oil production offset news of another decline in U.S. inventories last week.

The U.S. West Texas Intermediate crude February contract was down 42 cents or about 0.66% at $63.53 a barrel by 10:00 a.m. ET (14:00 GMT), off a two-week low of $62.84 hit earlier.

Elsewhere, Brent oil for March delivery on the ICE Futures Exchange in London lost 39 cents or about 0.56% at $68.92 a barrel, after hitting a one-and-a-half week low of $68.28 earlier in the session.

In its monthly report released on Thursday, the International Energy Agency said that global oil stocks have tightened substantially but also warned that rapidly increasing U.S. production could threaten market balancing.

Also Thursday, the American Petroleum Institute said that crude inventories declined by 6.9 million barrels in the week ending January 12 to their lowest seasonal level in three years.

Analysts and traders have recently warned that U.S. shale oil producers could ramp up production in the coming weeks as they look to take advantage of higher prices, potentially derailing an OPEC-led effort to curb excess supply.

The deal to cut oil output by 1.8 million barrels a day (bpd) was adopted last winter by OPEC, Russia and nine other global producers. The agreement was due to end in March 2018, having already been extended once.

Elsewhere, gasoline futures declined 0.53% to $1.871 a gallon, while natural gas futures dropped 0.50% to $3.173 per million British thermal units.