Oil prices rise on extended market optimism

Don't expect too many fireworks as traders pack up early for the year-end holidays.
By Daniel J. Graeber  |  Dec. 11, 2017 at 10:21 AM
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Dec. 11 (UPI) -- Crude oil prices continued to show modest gains in early Monday trading, even after sentiment and data show a potential for more U.S. oil on the market.

Crude oil prices are gaining some of the value lost in the brief slump that followed a late November decision by the Organization of Petroleum Exporting Countries to extend a production cut agreement until the end of 2018. Anticipation ahead of the agreement had inflated prices somewhat and now traders are shifting their attention back to market fundamentals.

Oil prices gained ground in the Friday session on signs of a surge in demand from China and generally positive figures for U.S. labor. The rally was extended even after drilling services company Baker Hughes reported an increase in exploration and production in North America, a sign of an eventual increase in output.

With end-of-year holidays approaching, Ole Hanson, the head of commodity strategy at Saxo Bank, said in an emailed commodities report that it may be a quiet end to the year unless something extraordinary triggers sharp gains or losses for the price of oil.

The price for Brent crude oil was up 0.58 percent at 9:22 a.m. EST to $63.77 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.33 percent to $57.55 per barrel.

The spread, or difference, between WTI and Brent means U.S. oil is gaining a competitive edge in its second year on the open market.

Sandy Fielden, the director of oil and products research for Morningstar, said there may be some competing trends moving into next year, but most trends were relatively supportive of crude oil prices.

"OPEC's recent production limit extension to the end of 2018 is positive for crude prices, and there is consensus that demand will increase during the second half of 2018," he said in a market report emailed to UPI before the market opened. "In the circumstances we expect WTI prices to stay above $52 per barrel, encouraging shale production and a continuing export boom."

Elsewhere on the supply side, the situation was largely balanced in terms of short-term movement. Aker BP said Monday its Tambar oil field in the North Sea was still closed following a fatal accident at a Maersk drilling rig last week. Also on Monday, a Norwegian regulator said Eni could resume operations at its Goliat field, which was closed in October because of safety concerns.

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