Crude oil prices starting to move in a pattern as gains in U.S. oil production balance against managed declines from OPEC. Photo by Monika Graff/UPI. |
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Feb. 14 (UPI) -- Tepid growth in the European economy and a recovery phase following steady losses in the previous session pushed oil prices higher early Tuesday.
Crude oil prices moved sharply lower Monday after a report from the Organization of Petroleum Exporting Countries found members were in general compliance with a multilateral agreement to hold production stable at 32.5 million barrels per day. That agreement put a floor under crude oil prices, which made more expensive areas like U.S. shale more attractive and added a level of balance to the overall market situation.
Yesterday's sharp downturn in crude oil prices was supported by concerns from the European Commission about the state of global economic affairs in an era of nationalistic and protectionist policies that emerged more forcefully since the inauguration of U.S. President Donald Trump.
A flash estimate of seasonally adjusted gross domestic product for the 19 countries that use the euro currency found an increase of 0.4 percent during the fourth quarter. According to Eurostat, the region's record-keeping body, that's almost as robust as fourth quarter growth in the United States, the world's leading economy.
The price for Brent crude oil was 0.7 percent higher than the previous close to trade at $55.98 per barrel about a half hour before the start of trading in New York. West Texas Intermediate, the U.S. benchmark price for oil, was up 0.6 percent to $53.23 per barrel.
Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in an emailed report that oil prices may be locked in a pattern that highlights the competing market dynamics of OPEC cuts and higher U.S. oil production.
At least since December, crude oil prices have stayed within a range of around $55 per barrel.
"Crude oil on Friday closed about unchanged from the previous Friday and yesterday crude oil retraced lower about as much as Monday of last week," Jakob's report read. "Monday has been systematically a down-day since the start of the year, Tuesday has been about continued weakness or stabilization, Wednesday has been the day for a rebound, continued on Thursday. Fridays have been more uncertain."
U.S. markets may be reacting positively to President Trump's scaled-down rhetoric about trade policies following a meeting with Canada's prime minister. Markets have been more or less bullish since Trump won the presidency, but underlying concerns about an isolated U.S. economy remain.
Elsewhere, demand could be impacted because of broader issues in the European economy. Though GDP grew in the fourth quarter, Eurostat reported seasonally adjusted industrial production fell 1.6 percent in the fourth quarter.
