Oil was steady as analysts said a supply glut that’s driven prices to the lowest level in more than five years will linger through the first half of 2015.
Crude has dropped by more than half since June as U.S. output surged and the Organization of Petroleum Exporting Countries decided to maintain its output ceiling. Saudi Arabia won’t cut its output, though producers outside the group are welcome to do so, Ali Al-Naimi, that country’s oil minister, said at a conference in Abu Dhabi last month.
“The Saudis are providing no support for the market,” Helima Croft, chief commodities strategist at RBC Capital in New York, said by phone. “It looks like they will let prices continue to fall, taking as much non-OPEC production offline as possible.”
Oil’s collapse has been so rapid and so driven by sentiment that forecasters from Bank of America Corp. to UBS AG say there are no clear signs of when the rout will
end. The U.S. is pumping the most crude in more than three decades as horizontal drilling and hydraulic fracturing unlock shale reserves, adding to a global supply glut that Qatar estimates at 2 million barrels a day.
West Texas Intermediate for February delivery added 18 cents to $48.83 a barrel at 9:51 a.m. on the New York Mercantile Exchange. Futures touched $46.83 yesterday, the lowest level since April 2009. The volume of all futures traded was 16 percent above the 100-day average for the time of day.
Crude Output
Brent for February settlement decreased 2 cents to $51.13 a barrel on the London-based ICE Futures Europe exchange. It touched $49.66 yesterday, the least since April 29, 2009. The European benchmark oil traded at a $2.32 premium to WTI.U.S. output expanded to 9.14 million a day through Dec. 12, the highest level in weekly data from the Energy Information Administration that started in January 1983.
Credit Suisse Group AG cut its forecast for this year’s increase in U.S. crude output by 500,000 barrels a day, David Hewitt, the co-head of the bank’s global oil and gas equity research, said at an investor conference in Singapore today. Growth may slow by 800,000 barrels a day in 2016 compared with its previous estimate, he said.
Crude Exports
Credit Suisse had previously expected U.S. production to accelerate by 1.3 million barrels a day in 2015, and 1.4 million next year, he said. Brent crude will average $75 a barrel this year and $80 in 2016, according to Hewitt.U.S. crude exports climbed 34 percent to 502,000 barrels a day in November, the most in records dating back to 1920, data from the Census Bureau and the EIA show. Some lawmakers in Washington are seeking to end a 40-year-old law that restricts crude sales to just a few overseas markets.
Gasoline futures slipped 0.8 cent, or 0.6 percent, to $1.3296 a gallon. Diesel rose 0.37 cent to $1.7036.
Regular gasoline at U.S. pumps fell to the lowest level since May 2009. The average retail price slipped 0.9 cent to $2.182 a gallon yesterday, according to Heathrow, Florida-based AAA, the nation’s biggest motoring group. Pump prices were around $2.05 a gallon when oil was last below $50 a barrel.
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