US oil prices extended modest gains on Thursday as OPEC’s strong compliance with a supply reduction pact offset news that US production topped 10 million barrels per day for the first time in nearly half a century.
NYMEX crude for March delivery rose 8 cents, or 0.1 per cent, to $64.81 a barrel by 0237 GMT, after ending the last session up 0.4 per cent.
London Brent crude for April delivery was up 10 cents, or 0.1 per cent, at $68.99, after settling up 3 cents in the previous session.
US crude oil production in November surpassed 10 million barrels per day for the first time since 1970, and neared the all-time output record, the Energy Information Administration said on Wednesday.
“As oil prices rise, higher shale output is definitely on the market’s mind,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.
Oil output by the Organization of the Petroleum Exporting Countries also rose in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela and strong compliance with a supply reduction pact, a Reuters survey found.
However, adherence by producers included in the deal to curb supply rose to 138 per cent from 137 per cent in December, the poll found, suggesting commitment is not wavering even as oil prices hit their highest level since 2014.
“OPEC nations realise that lower production would buoy oil prices and that it’s better for them,” Akuta added.
Oil prices are unlikely to advance much above $70 a barrel in 2018, with the market caught between the opposing forces of OPEC-led production cuts and surging US output, a Reuters poll showed on Wednesday.
Oil prices initially slipped on Wednesday after US Energy Information Administration data showed that US crude inventories unexpectedly rose by 6.8 million barrels last week, after 10 straight weeks of declines.
But prices rebounded on the back of a surprise 2 million-barrel drawdown in gasoline stocks, helping push up gasoline futures.
Distillate stockpiles, which include diesel and heating oil, fell by 1.9 million barrels, versus expectations for a 1.5 million-barrel drop, the EIA data also showed.
Kuwait Petroleum Corp expects to spend over $500 billion as it boosts its crude oil production capacity to 4.75 million barrels per day in 2040, the national oil firm said on Wednesday.