Crude oil prices closed the trading week on Friday with significant gains. After the contract rollover in the night, Brent was trading at USD 36 per barrel at one point, its highest level in 3½ weeks, currently, Brent futures (BRH2016) was trading at USD 33.25. Brent jumped at 8%, and as much as 20% in the last two weeks. But again giving up those gains bears back in action, it has dipped again below $30 mark.
While, WTI crude futures (CL1!) rose back above the $30.33 level during European trading session amid the conjecture on weekly supply data that would be released shortly.
The U.S. EIA is scheduled to release its weekly report on crude inventory levels (@ 15:30 GMT), where forecasts remain for a gain of 3.7 million barrels.
Notably, the price rise for WTI was much smaller than for Brent, making Brent now significantly more expensive than WTI again. This trend is primarily due to the ongoing discussion since mid-last week about coordinated production cuts by Russia and OPEC, from which Brent is profiting more.
However, weak economic data from China has resulted in oil prices shedding a good 2% since the markets opened.
According to production surveys by Reuters and Bloomberg on last Friday, OPEC is still producing much too much oil. According to Reuters, OPEC production rose in January by 290,000 to 32.6 million barrels per day, according to Bloomberg by 48,000 to 33.1 million barrels per day.
In both cases, this is the highest production volume for some years, even excluding Indonesia, OPEC member again since December. According to Reuters, Iran has increased its output by 250,000 barrels a day since the sanctions have been lifted.
The US crude oil production on the other hand fell in November by 52,000 to 9.32 million barrels per day according to the US Energy Information Administration, which was the second monthly decline in a row. Shale oil production rose slightly though.
Given the continued fall in drilling activity, however, a decline here is only a matter of time as well. As per Baker Hughes, the oil rig count has dropped below 500 for the first time since March 2010.
