Oil eases but still near four-week highs

 25 Oct 2017 - 14:56

Oil eases but still near four-week highs
Gas flares burning at the North Rumaila natural gas field, north of the southern Iraqi port of Basra. / AFP / HAIDAR MOHAMMED ALI

By Amanda Cooper / Reuters

LONDON: Oil steadied on Wednesday near a four-week high after top exporter Saudi Arabia said it was determined to end a supply glut that has been weighing on the market for three years.

Brent crude futures were flat on the day at $58.33 a barrel by 1137 GMT, having closed up 96 cents or 1.7 percent on Tuesday. US West Texas Intermediate crude was trading down 17 cents at $52.30.

Saudi Arabian Energy Minister Khalid al-Falih said on Tuesday the kingdom was determined to reduce oil inventories stocks in industrialised countries to their five-year average and raised the prospect of prolonged output restraint once an OPEC-led pact to cut supplies ends.

There is evidence that global inventory levels are falling and demand is strong, but the price has struggled to break above $60 a barrel, partly due to uncertainty about what will happen to crude supplies after March 2018, when the output reduction deal is due to end.

“We’ve got a two-way battle here and at this stage, the bulls are having it,” Saxo Bank senior manager Ole Hansen said.

“We are in much better shape than we have been for a long time. The million dollar question is - is the market ready and prepared for a go at key resistance above $60? I still feel that is a step too far,” he said.

The Organization of the Petroleum Exporting Countries, Russia and other producers have cut oil output by about 1.8 million barrels per day (bpd) since January. Their pact runs to March 2018, but they are considering extending it.

Data from the American Petroleum Institute on Tuesday showed US crude stocks rose by 519,000 barrels last week, compared with analysts’ expectations for a decline of 2.6 million barrels.

Gasoline inventories fell by 5.8 million barrels, compared with analysts’ expectations for a 17,000 barrel decline.
The US Energy Information Administration will release government inventory data on Wednesday.

“The up-trend is pausing for breath but a return to resistance-testing mode is on the cards,” PVM Oil Associates strategist Stephen Brennock said in a note.

“Moves and closes above key resistances are needed in order to green light targets higher. These are on WTI at $52.57/68; Brent $58.37.”

Disruptions to exports from Iraq, OPEC’s second-largest producer, amid tensions between Baghdad and autonomous Iraqi Kurdistan have supported oil prices. Kurdish authorities on Wednesday offered to suspend their independence drive.

Related News

arrow Read More
Blackout hits oil-producing state in Venezuela

 24 Oct 2017 - 18:11

A blackout left parts of Venezuela's oil-producing and most populous state of Zulia without power Tuesday, the government said.

arrow Read More
Slow North America oil growth hits hard on service companies

 22 Oct 2017 - 23:15

The investment appetite by explorers in North America "seems to be moderating" with the priority now being preservation of cash flow rather than the pursuit of continued production growth, Schlumberger said in an earnings statement on Friday. Baker Hughes, said in its report that it saw no meaningful boost in driller spending in the quarter. The shares fell for both companies.