Oil prices steady after OPEC signals possible deal extension

Andrew Cummings
October 10, 2017

Oil prices inched higher on Monday after one of the most bearish weeks in months, propped up by OPEC comments signaling the possibility of continued action to restore market balance in the long term, APA reports quoting Anadolu Agency.

OPEC has led an effort to cut output this year to end years of overproduction that created a huge supply overhang.

In a speech yesterday, Mohammed Barkindo said: "There is clear evidence that the market is rebalancing".

A day after crude prices fell 3% following a Reuters survey indicating that OPEC ramped up output in September, OPEC Secretary-General Mohammad Barkindo attempted to ease concerns over falling compliance with the deal to curb output.

"The process of global destocking continues, both onshore and offshore with positive developments in recent months showing not only a quickening of the process but a massive drainage of oil tanks across all regions". But Brent crude, trading at $55 on Monday, is still half its level of mid-2014. Dozens of major oil producing nations are working alongside the Organization of Petroleum Exporting Countries to drain the surplus on the five-year average for global crude oil inventories with managed production declines.

USA crude oil inventories fell by 4.08 million barrels last week, the American Petroleum Institute said on Tuesday, far more than expected while gasoline supplies gained 4.91 million barrels and distillates eased by 584,000 barrels.

"Just a mere 25 million barrels are products, nearly converging with the five year average", he said.

Oil prices were steady on Tuesday as OPEC said there were clear signs the market was rebalancing and as USA production remained offline following Hurricane Nate.

Investors, however, weighed the bullish comments against expectations of an uptick in United States shale output as the rise in crude oil prices - above $50 a barrel - has spurred drilling activity. "Between the first half and second half this year, demand growth is nearly about 2 million barrels (per day), which is very robust", he said.

Pradhan later extended an invitation to secretary general OPEC to attend the 16th Ministerial Meeting of International Energy Forum which on scheduled to take place in India on April 2018. They hold their next policy-setting meeting on November 30 in Vienna.

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