Oil mar­kets cau­tious as Opec cuts are met by ris­ing out­put

Oman Daily Observer - - FRONT PAGE -

SIN­GA­PORE: Oil mar­kets were tread­ing wa­ter early on Tues­day, con­tin­u­ing the cau­tious trad­ing seen over the last week as bullish fac­tors such as on­go­ing Opec-led pro­duc­tion cuts and Mid­dle East ten­sions are coun­tered by ris­ing US out­put.

Brent crude fu­tures were at $63.13 per bar­rel at 0127 GMT, down 3 cents from their last close. US West Texas In­ter­me­di­ate (WTI) crude was at $56.72 per bar­rel, down 4 cents.

The dips came af­ter both crude bench­marks early last week hit highs last seen in 2015, but traders said the mar­ket had lost some mo­men­tum since then.

“Oil is fairly calm. Opec is talk­ing its book and boost­ing de­mand ex­pec­ta­tions but the US rig count seems to have coun­tered that,” said Greg McKenna, chief mar­ket strate­gist at fu­tures bro­ker­age Ax­iTrader.

Price sup­port came from on­go­ing out­put cuts led by the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries (Opec) and Rus­sia, which have con­trib­uted to a re­duc­tion in ex­cess sup­plies.

Opec is due to meet on Novem­ber 30 to dis­cuss fur­ther pol­icy, and the group is ex­pected to agree an ex­ten­sion of the cuts be­yond their cur­rent ex­piry date in March 2018.

Also, ten­sions in the Mid­dle East raised the prospect of sup­ply dis­rup­tions, traders said, though they were cau­tious on bet­ting on fur­ther price rises.

“Prices... are start­ing to look like a pause or pull­back is needed,” said McKenna.

US oil pro­duc­ers have raised out­put by more than 14 per cent since mid-2016 to a record 9.62 mil­lion bar­rels per day (bpd).

Rat­ing agency Fitch said in its 2018 oil and gas sec­tor out­look that it as­sumed “av­er­age oil prices will be broadly un­changed year-on-year and that the re­cent price re­cov­ery with Brent ex­ceed­ing $60 per bar­rel may not be sus­tained”.

So far, the 2017 av­er­age Brent price has been $54.5 per bar­rel. — Reuters

— Reuters

A worker checks the valve of an oil pipe at a gas field in Ahmed­abad, In­dia.

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