Oil prices fight dueling market trends

NEW YORK, Dec. 21 (UPI) -- Oil prices were pulled by competing factors Wednesday with indications of fading supply-side issues in the U.S. market balancing production growth overseas.

Indications surfaced early in the week that U.S. crude oil stockpiles were dwindling in a short-term sign of fading supply-side pressures. The American Petroleum Institute reported late Tuesday that stocks dropped by 4.1 million barrels.

S&P Global Platts said official figures from the U.S. government are expected to show a draw of about 2 million barrels for the week ending Dec. 16. Platts analysts said some of the draw may be because companies are shedding inventory for year-end tax purposes.

Crude oil prices inched up only marginally ahead of the release of official data from the U.S. Energy Information Administration. The price for Brent crude oil was up 0.05 percent to start the day at $55.38 per barrel. The U.S. benchmark price for oil, West Texas Intermediate, was up 0.3 percent to open in New York at $53.45 per barrel.

Speaking to broadcaster Rossiya-24, Russian Oil Minister Alexander Novak said crude oil prices could flirt with $60 per barrel, but it was unlikely the market would return to the levels from two years ago when oil was above the $100 mark.

On the production side, both Norway and Libya reported gains in crude oil production, putting pressure on efforts by the Organization of Petroleum Exporting Countries to erase the oversupply. Libya is exempt from an OPEC deal to cut production and said its crude oil was flowing freely for the first time in years.

Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in an emailed report that major movements in prices could be muted during the year-end holiday season, but Libya could be a determining factor once trade resumes in earnest in 2017.

"The price action between Christmas and New Year can be driven by all sorts of end-of-year interests," he said. "However, when we return to a full market in early January, if Libya is indeed back, we expect that it will start to weigh on speculative sentiment."

Bankers are skeptical that all parties to the OPEC maneuver will hold true to their word. Russia, which would account for much of the non-OPEC cuts, has been fluid on its stance on production.