Oil prices rise as OPEC seen continuing supply cuts
SINGAPORE: Oil prices rose on Thursday as the producer cartel OPEC and other suppliers look set to continue withholding output for the rest of the year and potentially into 2019.
US WTI crude futures CLC1 were at $64.63 a barrel at 07:29 GMT, up 25 cents, or 0.4 per cent, from their previous settlement.
Brent crude futures LCOC1 were at $69.76 per barrel, up 23 cents, or 0.3 per cent. The Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) together with a group of NONOPEC producers led by Russia started cutting output in 2017 to rein in oversupply and prop up the market.
Brent, off which OPEC prices most its crude exports, has risen by around a quarter since then, which has lead to speculation that the restraints on production may be lifted.
But sources at OPEC said this week that the group and its allies were set to keep their deal on cutting production for the rest of 2018.
Despite this, Brent remained below $70 and WTI under $65 per barrel, weighed by rising crude inventories and production in the United States.
Commercial US crude inventories rose by 1.6 million barrels in the last week to 429.95 million barrels, the Energy Information Administration (EIA) said on Wednesday. US crude oil production hit a record, at 10.43 million barrels per day (bpd). That puts the United States ahead of top exporter Saudi Arabia. Only Russia pumps out more, at 11 million bpd.
In China, Shanghai crude oil futures ISCC1 opened on Thursday’s morning session down nearly 2 per cent, pushing the new market near to parity with US prices, before closing at 409.7 yuan ($65.18) per barrel at 07:00 GMT.
The latest drop takes the fall since the contract’s launch on Monday to 10 per cent. Despite high volatility and lingering scepticism about Shanghai’s trading hours, along with doubts about the process for physical delivery of crude under contract, most analysts expect the contract to establish itself as a third global oil price benchmark next to Brent and WTI.