Oil prices gets a helping hand from Middle East tensions

The price of oil remained stable despite the increase in US production, in a position that continually torpedoes OPEC’’s attempts to stabilize the market and reduce crude stocks. Analysts say the rise to tensions in the Middle East after the Trump administration announced the US would move its embassy in Israel to Jerusalem, a move that was met with widespread protest in the region.

The North Sea Brent benchmark was at $61.62 per barrel, while the West Texas Intermediate was registered at $56.22 per barrel.

Crude oil production in the United States rose by 25,000 barrels per day (bpd) to 9.71 million bpd, the highest level since the early 1970s when the country produced more than 10 million bpd. Analysts estimate that the unprecedented increase in gasoline stocks can also generate uncertainty in a market that barely managed to achieve a slight stability.

Meanwhile, data from China showed strong crude import data for November, imports jumped above 9 million barrels per day, up from 7.3 mb/d a month earlier. China’s crude oil imports rebounded from a one-year low to near a record amid signs the nation’s commercial stockpiles shrank by the most in almost eight years.

US crude output increased to a record last week, while motor fuel inventories rose more than double analysts’ forecasts, government data showed.

Oil has averaged about $54/bbl this quarter, the highest in more than two years as the Organization of Petroleum Exporting Countries and its allies agreed to extend output curbs until the end of 2018.

West Texas Intermediate for January delivery was at $57.46/bbl on the New York Mercantile Exchange, up 77 cents. Total volume traded was about 5 percent below the 100-day average. Prices gained 73 cents, or 1.3 percent, to $56.69.

Brent for February settlement rose 82 cents to $63.02/bbl on the London-based ICE Futures Europe exchange after climbing 1.6 percent. Prices are down 1 percent. The global benchmark traded at a premium of $5.48 to February WTI.

US crude production expanded for a seventh week to 9.7 MMbpd, the highest level in weekly data compiled by the Energy Information Administration since 1983. Gasoline inventories rose by 6.78 MMbbl last week, the biggest gain since January.

FRANK UZUEGBUNAM