Published: Sat, November 18, 2017
Economy | By Melissa Porter

Oil steady as expected output pact extension offsets USA supply

Oil steady as expected output pact extension offsets USA supply

Demand for transportation infrastructure has accompanied increased USA crude oil production in recent months, EIA reported.

The threat of higher shale production kept a lid on oil prices for much of 2017, but investors have recently become more optimistic on the market.

USA crude and gasoline stocks increased while distillate inventories fell, the Energy Information Administration said on Wednesday.

The Energy Information Administration (EIA) stated on Wednesday that the availability of crude oil as well as gasoline in the nation unexpectedly rose last week, making this its second consecutive week of increase.

On the New York Mercantile Exchange crude futures for December delivery inched up 0.02% to $55.34 a barrel, while on London's Intercontinental Exchange, rose 0.10% to $61.94 a barrel.

United States crude inventories added 1.9 million more barrels in the week to November 10, which was clearly different from analysts' forecast of a 2.2 million barrels decrease.

Crude imports were up 261,000 barrels per day (bpd) to 7.9 million bpd last week, seeing that exports rose 260,000 bpd to 1.1 million bpd. "As we go into next year I think that will be the biggest problem coupled with the exit strategy from OPEC".

Distillate inventories saw a decline this week, down 2.527 million barrels.

The deal is due to expire in March 2018, but Opec will meet on November 30 to discuss policy, and it is expected to agree an extension of the cuts.

Demand prospects have also dimmed this week, further weighing on the market.

Crude oil futures were lower for a second session Wednesday as traders assessed a pair of crucial U.S. economic reports. Prices trended higher after Saudi Arabia's energy minister on Thursday signaled a willingness to extend output cuts when OPEC meets on November 30 on whether to extend caps well into 2018."Obviously, the comments gave us guarantee that the extension is going to happen and was a driving story overnight", said Phil Flynn, an analyst at Price Futures Group in Chicago."Globally, we're coming against the backdrop of tightness in distillate inventories and strong global refinery demand". That could mean world oil consumption may not breach 100 million bpd next year as many had expected. "Brent would break back below US$60 a barrel". This "is likely to once again result in builds in broader petroleum inventories", Mr. Loewen wrote on Tuesday.

Gasoline futures fell 1.3% to $1.7388 a gallon and diesel futures rose 0.1% to $1.9087 a gallon. But prices were still on track to fall almost 2 percent this week, as fears of oversupply in the United States weighed after government data showed output hit a record 9.65 million bpd last week.

-Christopher Alessi contributed to this article.

Like this: