Oil rally ends as U.S. production expected to keep prices in check | The Globe and Mail

oil derrick

Global crude markets carried their end-of-year momentum into 2018, but will have trouble taking prices higher in the coming weeks barring a major geopolitical event, analysts say.

Leading international and North American benchmark prices hit their highest levels in nearly two years near the end of last week, before a profit-taking selloff on Friday. Analysts expect prices to ease back below $60 (U.S.) for West Texas intermediate (WTI), as American shale-oil producers take advantage of the runup over the past month to increase production at locked-in prices.

“We are cautious at current price levels given that the major theme this year is going to be a [growing] U.S. producer versus a fundamental oil backdrop that looks quite constructive,” Michael Tran, energy strategist at Royal Bank of Canada in New York, said in an interview.

“Oil prices have reached the self-declared sweet spot for U.S. producers,” Mr. Tran said. While there is some uncertainty over how much U.S. companies can boost output, many are hedging a significant portion of their future production at today’s prices, he said.

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Oil rally ends as U.S. production expected to keep prices in check – The Globe and Mail.