Oil slips after hitting three-year high
London (Reuters): Oil prices fell Friday as some investors cashed in on the week’s strong gains and others mulled ambiguous U.S. inventory data.
Although analysts and traders have been warning of the risks of a downward price correction since the start of the year, they point out that overall market conditions remain strong, largely due to ongoing production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $63.34 a barrel at 0755 GMT, down 46 cents, or 0.7 percent, from their last settlement. WTI the day before rose to its strongest since late 2014 at $64.77.
Brent crude futures LCOc1 were at $68.97 a barrel, down 29 cents, or 0.4 percent, from their last close. Brent also marked a December-2014 high the previous day, at $70.05 a barrel.
Traders said relatively weak China December oil data had weighed on prices. China’s crude oil imports in December eased to 33.7 million tonnes, or 7.97 million barrels per day, versus 37.04 million tonnes in November, customs data showed on Friday.
Meanwhile, its December oil products exports hit a record 6.17 million tonnes, as refiners churn out more fuel than even thirsty China can absorb.
This has contributed to a fall in Singapore refinery profit margins DUB-SIN-REF to below $6 per barrel this month, their lowest seasonal level in five years.
Despite the lower prices on Friday, many analysts expect crude markets to remain firm this year, especially due to the OPEC-led production cuts.
“OPEC has acted successfully to reduce the inventory overhang and demand growth remains robust in the short term,” said Sanjeev Bahl, analyst at Edison Investment Research in a 2018 outlook.
The production cuts started in January last year and are set to last through 2018.
U.S. commercial crude oil inventories C-STK-T-EIA fell almost 5 million barrels in the week to Jan. 5, to 419.5 million barrels. That’s slightly below the five-year average of just over 420 million barrels.