LONDON: Oil prices steadied on Thursday, holding onto most recent gains, supported by OPEC-led supply cuts, tension in the Middle East and lower US production.
Brent crude was down 20 cents at $57.95 a barrel by 07:45 GMT, still around 30 per cent above mid-year levels. US light crude was 20 cents lower at $51.84, almost 25 per cent higher than its lows in June. “The oil market is tightening gradually,” said Tamas Varga, analysts at London brokerage PVM Oil Associates.
“OPEC is expected to roll over output restrictions for another nine months, supplies are at risk in the Middle East and US inventories are falling.” The US Energy Information Administration said on Wednesday that US crude inventories fell by 5.7 million barrels in the week to Oct. 13, to 456.49 million barrels. US output slumped by 11 per cent from the previous week to 8.4 million barrels per day (bpd), its lowest since June 2014 as production was shut in by a hurricane.
Instability in the Middle East has increased risks to supply from key oil producing areas.
“The ‘Fragile Five’ petrostates — Iran, Iraq, Libya, Nigeria and Venezuela - continue to see supply disruption potential, with northern Iraq crude exports at risk due to an escalation of tensions between the (Kurdistan Regional Government), Baghdad and Turkey, while the United States has decertified the 2015 Iran nuclear deal,” US bank Citi said.
Iraqi Kurdistan’s oil exports more than halved to 225,000 bpd on Wednesday as Iraqi military retook some of the biggest fields from Kurdistan’s Peshmerga forces.
“Geopolitical risk has returned to the oil market ... As a result, we have raised our ICE Brent forecast for 4Q17 from $45 per barrel to $52,” Dutch bank ING said on Thursday.
US President Donald Trump last week refused to certify Iran’s compliance over a nuclear deal, leaving Congress 60 days to decide further action against Tehran. — Reuters
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