LONDON: Oil prices steadied on Thursday as supply cuts by Opec and other major exporters tightened the market despite higher production in the United States. Benchmark Brent crude LCOc1 was down 20 cents at $60.29 a barrel by 0850 GMT. On Wednesday, Brent reached its highest intraday level since July 2015. It is up by more than a third since its 2017-lows in June. US light crude CLc1 was 20 cents lower at $54.10, almost 30 per cent above its 2017-low in June.
Confidence has been fuelled by an effort this year lead by the Organization of the Petroleum Exporting Countries and Russia to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets.
Saudi Arabian Energy Minister Khalid al Falih said on Thursday supply and demand balances were tightening and oil inventories falling, while compliance with the Opec-led pact to curb supplies had been “excellent”.
Russian oil output edged up to 10.93 million bpd in October from 10.91 million bpd in September, official data showed on Thursday, but the country remains in compliance with the deal to curb output.
Overall, oil markets have been slightly undersupplied this year, resulting in inventory drawdowns.
The pact to withhold supplies runs to March 2018, but there is growing consensus to extend the deal to cover all of next year.
Oil was also supported by falling US commercial crude inventories despite rising output.
US commercial crude oil inventories fell by 2.4 million barrels in the week to October 27 to 454.9 million barrels, according to data from the Energy Information Administration.
“US crude inventories are back on a downward trend after disruptions from hurricane Harvey caused a small build,” said William O‘Loughlin, analyst at Rivkin Securities. This came despite a 46,000 bpd increase in production to 9.55 million bpd. US crude output is now up over 13 per cent since mid-2016. — Reuters
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