Facing multiple pressures, oil prices move lower
Gains in production from some OPEC members, expected U.S. gains and European economic concerns pushed oil prices lower early Monday. The Organization of Petroleum Exporting Countries published its monthly market report for January on Monday, the first full-month report that contains data on implementation of a managed production decline agreement. OPEC pledged to keep production at 32.5 million barrels per day starting in January and data show members produced 32.14 million bpd, based on secondary sources. December production using the same sources was 33.3 million bpd.
Iran is the only member of OPEC with room for production growth and secondary sources reported an increase of 50,000 bpd from December. Libya and Nigeria are exempt from the agreement to curb production and, collectively, they added 166,500 bpd to the global market in January. Outside of OPEC, the monthly market report found the increase in crude oil prices since late 2016 has improved the economics for some producers, Brazil and the United States in particular. U.S. shale oil production was curbed during last year's downturn, though OPEC said recovery is emerging along with improved crude oil prices. Production gains from some OPEC members and the United States created a condition of oversupply and pushed crude oil prices to historic lows in early 2016. The price for Brent crude oil was lower than Friday's close by 0.9 percent about a half hour before the start of trading in New York to $56.20 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, was down 0.8 percent to $53.46 per barrel.
Elsewhere, the European Commission published a regular forecast for the regional economy. From elections in France and Germany, to the British decision to leave the European Union, the forecast reported sluggishness was expected this year before some level of recovery emerges in 2018. Policies from U.S. President Donald Trump, meanwhile, add another layer of uncertainty. "There is increasing evidence that the exceptional strength of the supportive factors has started to fade even as Europe faces numerous challenges," the report read. "The outcome of the US presidential election adds some upside risks related to fiscal stimulus, but has also raised the possibility of isolationist and protectionist policies that would hurt the global and European economy, should they be enacted." The 19 countries that use the euro currency are expected to slow to 1.6 percent in 2017, after 1.7 percent growth recorded last year.