Jan. 22 (UPI) — Word over the weekend of yet another possible extension to OPEC’s balancing act was offset somewhat by gains in Libya, leaving oil prices even on Monday.
Members of a committee monitoring compliance with the effort by the Organization of Petroleum Exporting Countries to erase the surplus of oil on the market met during the weekend in Oman to discuss the impacts. Oil prices so far this year are flirting with four-year highs as the market tightens up, but Saudi Oil Minister Khalid al-Falih suggested cooperation could extend beyond 2018.
If supported, it would be the second extension for an agreement that last year supported a $50 floor under the price of crude oil. It would come up against suggestions that, if prices rallied too high, members could start looking for an exit by the summer.
Joe McMonigle, a senior energy analyst at Hedgeye Risk Management, said in emailed comments that Saudi support for another extension comes as Saudi Aramco, the world’s largest oil company, is planning its initial public offering this year.
“With the Aramco IPO coming this year, the Saudis are now like an activist investor on oil prices and so we will continue to see bullish comments and verbal intervention from them throughout the year,” he said. “Therefore Falih’s comments are not surprising and especially now.”
Higher prices would mean more support for the U.S. shale oil drillers upsetting OPEC’s plans. On Monday, Jeff Miller, the president and CEO of drilling services company Halliburton, said that he likes what he sees so far in 2018. Commodity prices, he said, are supportive of increased activity in North America.
Sandy Fielden, the director of oil and products research for Morningstar, said non-OPEC supply will likely lead to a build in inventories unless it’s met with strong demand.
“Our view is that supply will slightly outweigh demand, leading to price erosion in the balance of 2018,” he said in an emailed report.
Oil prices were moving between slight gains and losses in overnight trading. The price for Brent crude oil was up 0.12 percent to $68.67 per barrel as of 9:15 a.m. EST. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.11 percent to $63.34 per barrel.
Falih’s comments would usually send oil prices sharply higher, though a U.S. government shutdown and the resumption of operations from an oil field in Libya could be throttling momentum early in the trading session.
German energy company Wintershall said it was able to restart production from its C96 license area in the As-Sarah field, its largest producer in Libya.
Production was closed in November following pressure from a municipality that complained the national oil company wasn’t meeting local demands. Libya is formally excluded from the OPEC agreement so it can use oil revenue for national security purposes.