London — Oil prices were broadly steady on Thursday, supported by a pick-up in equity markets, but held back by evidence that supply will overtake demand in 2018.
Brent crude futures were last down 13 US cents on the day at $64.76 a barrel, while US West Texas Intermediate (WTI) crude futures were up 1c at $60.97 a barrel.
Global oil demand is expected to pick up in 2018 but supply is growing at a faster pace, leading to a rise in inventories in the first quarter of 2018, the International Energy Agency (IEA) said on Thursday.
"Oil and [the stock market] have been moving hand in hand … which basically means oil is extremely sensitive to the growth outlook," SEB commodity strategist Bjarne Schieldrop said, adding he still expected demand growth to reach 1.8-million barrels per day this year.
European equity markets were buoyed by strong earnings from several key financial firms, while US stock index futures pointed to a pickup on Wall Street later.
The oil price has moved in sync with stocks uninterruptedly for the past 99 trading days, the longest such stretch in two years.
Opec and several other nonOpec producers led by Russia began cutting supply in January 2017 to erase a global glut of crude that had built up since 2014.
The IEA and Opec both reported a modest rise in global inventory levels in January.
Looming over markets has been a relentless climb in US crude output, which hit another record last week by rising to 10.38-million barrels per day, up by more than 23% since mid-2016. Commercial crude inventories were up by 5-million barrels, at 430.93-million barrels.
"Surging US output levels will continue to undermine Opec’s efforts for stronger oil prices," said Singapore-based brokerage Phillip Futures in a note on Thursday.
US crude production, which has already overtaken that of top exporter Saudi Arabia, is expected to rise above 11-million barrels per day later in 2018, taking the top spot from Russia, according to the IEA.
The IEA believes nonOpec supply, led by the US, will grow by 1.8-million barrels per day in 2018, while demand will grow by about 1.5-million barrels per day.
The Opec cuts combined with rising US output mean Opec is losing market share.
"In 2018, demand for Opec crude is forecast at 32.6-million barrels per day, down by 200,000 barrels per day from the previous assessment and 200,000 barrels per day lower than a year earlier," Opec said.
Reuters
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