Published: Thu, October 12, 2017
Economy | By Guillermo Lane

Oil prices steady as Saudis pump more; OPEC sees strong demand

Oil prices steady as Saudis pump more; OPEC sees strong demand

Good compliance with production caps, "strong" demand and slower-than-expected growth in US shale output have helped accelerate the rebalancing, he said. Saudi Arabia has cut November allocations by 560,000 barrels per day (bpd), in line with its commitment to an OPEC-led supply reduction pact.

Still, OPEC is not banking on a surge in prices, saying in the report crude is expected to remain at $50 (37.91 pounds) to $55 a barrel in the next year. Brent crude settled up 82 cents, or 1.5 percent, at $56.61 a barrel while U.S. crude rose $1.34, or 2.7 percent, to settle at $50.92.

"It calls into question how committed Saudi Arabia is to those production cuts", said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

Last year, the bloc and some others producers chose to reduce production by around 1.2 million barrels per day from January 1, 2017.

Ahmad writes that OPEC Secretary General Mohammed Barkindo has surprised many ahead of the upcoming OPEC meeting on November 30 in Vienna, by calling on USA shale producers to join forces with OPEC in its ongoing battle to reduce the persistent oversupply of oil in the market.

Barclays had raised its price outlook for the fourth quarter of 2018 and the first quarter of 2017. The API usually releases the weekly report every Tuesday, but this report is scheduled to release on Wednesday due to the United States federal holiday on Monday, October 9, 2017.

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Oil prices also gained support by the International Monetary Fund's prediction that global economic growth is expected to be 3.6% this year and 3.7% next year.

OPEC said the world would need 33.06 million barrels per day (bpd) of its crude next year, up 230,000 bpd from its previous forecast.

Speaking at the Reuters Global Commodities Summit, Vitol CEO Ian Taylor said US output would climb another 500,000 to 600,000 bpd next year before flattening.

The API (American Petroleum Institute) is scheduled to release its weekly crude oil inventory report on Wednesday, October 11. He said the picture was "not clear because you still have hurricane related news".

US crude inventories probably fell for a third straight week, while refined product stockpiles also likely declined, a Reuters poll showed.

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