Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil slips but holds most gains on expected OPEC cuts

Published 10/19/2017, 07:44 AM
Updated 10/19/2017, 07:44 AM
© Reuters. FILE PHOTO: The Philadelphia Energy Solutions oil refinery is seen at sunset in front of the Philadelphia skyline

© Reuters. FILE PHOTO: The Philadelphia Energy Solutions oil refinery is seen at sunset in front of the Philadelphia skyline

By Christopher Johnson

LONDON (Reuters) - Oil prices slipped on Thursday but held onto most recent gains, supported by OPEC-led supply cuts, tension in the Middle East and lower U.S. production.

Brent crude (LCOc1) was down 75 cents at $57.40 a barrel by 1135 GMT, still around 30 percent above mid-year levels. U.S. light crude (CLc1) was 65 cents lower at $51.39, almost 25 percent higher than its lows in June.

Analysts said some investors were taking profits after two weeks of gains but upward momentum remained strong.

"The oil market is tightening gradually," said Tamas Varga, analyst at London brokerage PVM Oil Associates.

"OPEC is expected to roll over output restrictions for another nine months, supplies are at risk in the Middle East and U.S. inventories are falling."

The U.S. Energy Information Administration said on Wednesday that U.S. crude inventories fell by 5.7 million barrels in the week to Oct. 13, to 456.49 million barrels.

U.S. output slumped by 11 percent from the previous week to 8.4 million barrels per day (bpd), its lowest since June 2014 as production was shut in by a hurricane.

Instability in the Middle East has increased risks to supply from key oil-producing areas.

"The 'Fragile Five' petrostates - Iran, Iraq, Libya, Nigeria and Venezuela - continue to see supply disruption potential, with northern Iraq crude exports at risk due to an escalation of tensions between the (Kurdistan Regional Government), Baghdad and Turkey, while the United States has decertified the 2015 Iran nuclear deal," U.S. bank Citi said.

Iraqi Kurdistan's oil exports more than halved to 225,000 bpd on Wednesday as the Iraqi military retook some of the biggest fields from Kurdistan's Peshmerga forces.

"Geopolitical risk has returned to the oil market ... As a result, we have raised our ICE Brent forecast for 4Q17 from $45 per barrel to $52," Dutch bank ING said on Thursday.

U.S. President Donald Trump last week refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide further action against Tehran.

During the previous round of sanctions against Iran, around 1 million bpd of oil was cut from markets.

Analysts say crude supply should keep tightening if the Organization of the Petroleum Exporting Countries and partners, including Russia, extend as expected a deal to curb production through next year.

© Reuters. FILE PHOTO: The Philadelphia Energy Solutions oil refinery is seen at sunset in front of the Philadelphia skyline

"OPEC is desperate to bring the market into equilibrium," said Shane Chanel at ASR Wealth Advisers.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.