Oil steadies

LONDON. — The Brent oil price was steady at close to two-year highs yesterday, with support from Middle East tensions and record long bets by fund managers balanced by rising US production.

Benchmark Brent crude futures LCOc1 were down a modest 5 cents at $ 63,47 a barrel by 1228 GMT but up 14 percent so far this month. US West Texas Intermediate ( WTI) crude futures CLc1 rose 6 cents to $ 56,68. Traders said crude prices were well supported as output cuts led by the Organisation of the Petroleum Exporting Countries and Russia have contributed to a reduction in excess supply that had dogged markets since 2014. The level of inventories held by industrialised above the five-year average “has fallen by more than 50 percent in 2017, with inventories currently at around 160 million barrels,” consultancy Timera Energy said.

“If current trends continue, inventories are likely to return to the five-year average at some stage in 2018,” it said, adding that strong demand had also helped reduce the glut.

OPEC has sought to push stocks to the five-year average. Hedge funds increased holdings of Brent futures and options in the latest week, extending their bet on a rally to the highest on record. Managers now hold net long positions equivalent to nearly 544 million barrels of oil. “Overall, there are a few reasons for confidence — compliance from OPEC — and it seems likely they'll extend the cut,” said Jasper Lawler, a market strategist at London Capital Group, referring to the output deal due to expire in March.