US oil prices extended modest profits on Thursday as OPEC’s strong compliance with a supply reduction pact offset news that US production topped 10 million barrels every day for the first time in nearly half a century.
NYMEX crude for March delivery increased to 8 cents, or 0.1 percent, to $64.81 a barrel by 0237 GMT, after ending the last session up 0.4 percent.
London Brent crude for April delivery increased to 10 cents, or 0.1 percent, at $68.99, after settling up 3 cents in the previous session.
The Energy Information Administration said on Wednesday said that US crude oil production in November surpassed 10 million barrels per day for the first time since 1970, and neared the all-time output record.
Senior economist at Mitsubishi UFJ Research and Consulting in Tokyo, Tomomichi Akuta said, “As oil prices rise, higher shale output is definitely on the market’s mind.”
Oil output by the Organization of the Petroleum Exporting Countries also increased in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further reduction in Venezuela and strong compliance with a supply reduction pact, a Reuters survey found.
However, adherence by producers included in the deal to curb supply increased to 138 percent from 137 percent in December, the poll found, suggesting commitment is not wavering even as oil prices hit their highest level since 2014.
Akuta added that, “OPEC nations realise that lower production would buoy oil prices and that it’s better for them.”
Oil prices are unlikely to increment much above $70 a barrel in 2018, with the market caught between the opposing forces of OPEC-led production cuts and surging US output, a Reuters poll showed on Wednesday.
Oil prices initially decreased on Wednesday after US Energy Information Administration data showed that US crude inventories unexpectedly rose by 6.8 million barrels last week, after 10 straight weeks of declines.
But prices rebounded on the back of a surprise 2 million-barrel drawdown in gasoline stocks, helping push up gasoline futures.
The EIA data also showed that, Distillate stockpiles, which include diesel and heating oil, reduced by 1.9 million barrels, versus expectations for a 1.5 million-barrel drop.
The national oil firm said on Wednesday that Kuwait Petroleum Corp expects to spend over $500 billion as it boosts its crude oil production capacity to 4.75 million barrels per day in 2040.
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