Crude near five-month high as Mideast producers stick to cuts
AMSTERDAM: Oil prices traded close to five-month highs on Tuesday after fresh data showed key Middle Eastern producers continued to cut supply in line with an Opec-led deal aimed at ending a crude glut.
A weaker US dollar also lent support to greenback-denominated commodities like oil, traders said.
Benchmark Brent crude futures were up 31 cents at $55.79 a barrel at 0957GMT, not far off a five-month high of $55.99.
US West Texas Intermediate (WTI) crude futures were up 44 cents at $50.35 per barrel.
Sentiment has been buoyed since last week when the International Energy Agency lifted its 2017 demand outlook and the Organisation of the Petroleum Exporting Countries (Opec) estimated the world would need more of its crude next year.
“The bullish trend for oil is fed by a few factors like upward revisions in oil demand from Opec and IEA, Saudi Arabian exports dropping to a three-year low in the summer and, last but not least, the continuing weakness of the US dollar,” said Frank Schallenberger, head of commodity research at LBBW.
Adding to the bullish mood, Opec’s second-biggest producer Iraq said on Tuesday it had cut output by about 260,000 barrels per day (bpd), exceeding cuts agreed under the Opec-led pact.
This comes a day after official export data showed Saudi Arabian July crude exports dropped to the lowest in three years, highlighting its own compliance with output restrictions.
However, rising crude prices have encouraged drilling in US shale oil regions. The US government said on Monday it expected shale output to rise for a 10th straight month in October.
“This will make it more difficult for Opec to achieve the desired market balance,” said analysts at Commerzbank.
Output across seven shale plays is forecast to rise by nearly 79,000 bpd to 6.1 million bpd, according to the US Energy Information Administration. Traders also closely watched the progress of Hurricane Maria in the Caribbean. Although it remains far from the US oil production heartland in the Gulf of Mexico, it could dampen oil demand and disrupt maritime trading routes. —