Oil prices inches lower in early trading on Monday. Markets are growing calmer more than two years after the price of oil began dropping below $100 per barrel. File photo by Monika Graff/UPI | License Photo
Aug. 14 (UPI) -- Crude oil prices edged lower early Monday on signals of declining volatility and reports of a stronger position from OPEC-member Libya.
Sandy Fielden, the director of research, commodities and energy at Morningstar, said in a report that crude oil prices were settling into a relatively narrow range, which would indicate the volatility that followed a decline in crude oil prices that started in the second half of 2014 is finally starting to ease.
"Although outside factors such as geopolitical instability -- think Venezuela or North Korea -- can always throw a curveball, the indications are that today's relative stability is here to stay until the next system shock," his report read.
Crude oil prices have been holding in a range in the upper $40 and low $50 range for most of the year. An effort by the Organization of Petroleum Exporting Countries to drain the historic glut of oil on the market helped put a floor under the price of oil, but a resilient U.S. shale oil sector has put a limit on how high oil prices can go. A stronger market would revive capital streams toward exploration and production and risk tilting the market heavily toward the supply side.
After mixed results for the second quarter, U.S. shale player BNK Petroleum on Monday said it was anticipating more production from its assets in Oklahoma.
Fielden said the difference between the September contract and the contract for December 2022 was just $2.72 per barrel, which he said backed the sentiment for "lower for longer" crude oil prices.
The price for Brent crude oil was down 0.6 percent at 9:20 a.m. EDT to $51.78 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.5 percent from Friday's close to $48.57 per barrel.
Further supply-side strains emerged from Libya, one of two OPEC members exempt from the production agreement. Nigeria is exempt, but said it would work to hold production steady once it reached 1.8 million barrels per day, a figure more or less consistent with OPEC's latest accounting.
"Libya is now left as the sole OPEC nation with free reign to boost supply," an emailed report from London oil broker PVM read.
OPEC reported Libyan production in July at 1 million barrels per day and the head of the Libyan National Oil Corp. set a year-end target of 1.25 million barrels per day.