Crude slips but tight supplies offer support

London — Oil prices eased on Thursday after weak US jobs data and some profit-taking, but remained underpinned by tight supply as Opec+ producers stuck to planned moderate output increases.

Brent crude fell 61c, or 0.7%, to $88.86 a barrel by 9.15am GMT, after rising 31c on Wednesday. West Texas Intermediate was down 69c, or 0.8%, at $87.57, having gained 6c the previous day.

US private payrolls fell for the first time in a year in January, raising the risk of a sharp decline in employment that would deal a temporary setback to the labour market.

Still, tight global supplies and geopolitical tensions in Eastern Europe and the Middle East have boosted oil prices by about 15% this year.

Opec and allies led by Russia, known as Opec+, agreed on Wednesday to stick to moderate oil output increases of 400,000 barrels a day despite pressure from top consumers to raise production more quickly.

“At this juncture, even if Opec+ were ramping up faster, this would only come at the expense of a critically lower level of spare capacity,” Goldman Sachs said in a note.

The bank, which forecasts Brent topping $100 a barrel in the third quarter, had predicted that Opec+ may consider unwinding its production cuts more rapidly.

In Nigeria, which is struggling to meet its production quota under the Opec+ deal due to a lack of investment, Shebah Exploration & Production Co. Ltd (Sepcol) reported an explosion at one of its oil production vessels on Thursday. The facility’s daily capacity is 22,000 barrels, according to Sepcol CEO Ikemefuna Okafor.

Shell again boosted its dividend and share repurchases on Thursday reporting that fourth-quarter profits hit their highest in eight years, fuelled by higher oil and gas prices and a strong gas trading performance.

US crude stockpiles fell by 1-million barrels last week, the US Energy Information Administration said on Wednesday, while distillate inventories also dropped on strong demand domestically and in export markets.

Forecasts for cold weather in central US states and parts of the northeast this week also supported prices.

Reuters