WTI pares majority of daily gains, stays above $57
|- Crude oil pushes higher on Monday on Forties pipeline supply disruption.
- The labor strike in Nigerian energy industry kicks off on Monday.
- US shale output undermines OPEC's effort to balance the market.
Crude oil prices gained traction at the start of the week amid rising concerns over supply disruptions from Nigeria and Forties pipeline, and the barrel of West Texas Intermediate advanced to a daily high of $57.80 before losing its momentum.
Despite the positive start, however, further developments on the subjects mentioned above made it difficult for oil to extend its gains. The Petroleum and Natural Gas Senior Staff Association of Nigeria announced that they were negotiating with officials from the labor ministry. Meanwhile, the operator of the North Sea Forties pipeline said that the crack, which caused the shutdown of the 450,000-barrels-per-day delivering physical line last week, hadn't spread, easing concerns over a longer-than-expected supply disruption.
"There is still no reliable information about how long the repair work will last, and when the pipeline will go back into operation, this should preclude any fall in the Brent price for the foreseeable future," Commerzbank told Reuters on Monday.
On the other hand, although the Baker Hughes rig count showed its first decline in six weeks last week, the shale production in the U.S., which is now about 9.8 million barrels per day, continues to undermine OPEC's efforts to balance the oil market. In a report that was published last week, the International Energy Agency said global oil markets would show a supply surplus of around 200,000 bpd in the first half of 2018.
- WTI net longs at record highs - CFTC
Technical outlook
The barrel of WTI could encounter the first hurdle at $57.80/85 (Daily high/Dec. 13 high) ahead of $59 (Nov. 24 high) and $60 (psychological level). On the downside, supports are located at $56.10 (Dec. 14 low), $55 (psychological level) and $53.90 (Nov. 1 low).
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