Feb. 7 (UPI) — Crude oil prices were mixed early Wednesday on signs that U.S. shale oil growth accelerated, but the downturn was moderated by a good EU economic outlook.
The U.S. Energy Information Administration reported total January crude oil production averaged 10.2 million barrels of oil per day, an increase of 100,000 barrels per day from December. An average of 10.6 million barrels per day is expected for the year, meaning the United States is now expected to produce more than Saudi Arabia.
Saudi Arabia is producing just under 10 million barrels per day, according to S&P Global Platts. Saudi Arabia is the de facto leader of the Organization of Petroleum Exporting Countries and its effort to trim a market surplus with coordinated production cuts. Total OPEC production in January was around 32.5 million barrels per day, below its ceiling of around 32.7 million barrels per day.
OPEC’s effort, now in its second year, has put a floor under the price of oil at around $50 per barrel, but gains so far this year have led to concerns that U.S. oil production would offset some of the cuts. In a separate report, Platts in its gauge of exploration and production in the Lower 48 found most states with rich shale oil reserves were seeing increased activity, not just Texas.
Steady gains in U.S. crude oil production could lead to supply-side concerns, though, recent stock market contractions aside, the general sense is that the global economy is on solid footing and could soak up the extra oil. The European Commission on Wednesday reported that combined gross domestic product for the countries that use the euro currency, and other member states, grew 2.4 percent last year..
“Europe’s economy has entered 2018 in robust health,” Pierre Moscovici, the European commissioner for economic and financial affairs, said in a statement.
Crude oil prices fluttered around even territory in the early morning hours. The price for Brent crude oil was up 0.13 percent as of 9:18 a.m. EST to $66.95 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.32 percent to $63.19 per barrel.
Crude oil prices followed broader markets lower in the first few trading sessions of February, following a steady run in bullish territory for most of the previous month.
Paul Traub, a senior business economist at the Detroit branch of the Federal Reserve Bank of Chicago, told UPI not to read too much into the dramatic swings in stock markets over the last few days.
“Equity markets are not the economy and right now most economic fundamentals look good for continued growth,” he said. “Demand for oil should not change based on the stock market as commodity prices are a function of supply and demand.”