Oil prices rise to
two-week high on dip in U.S. output
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[June 29, 2017]
By Karolin Schaps
LONDON (Reuters) - Oil prices rose to a
two-week high on Thursday, extending a rally into a sixth straight
session after a decline in weekly U.S. production eased concerns about
Crude prices slipped to the lowest in 10 months last week but have since
rebounded more than 7 percent, stretching their bull-run to the longest
Global benchmark Brent crude futures <LCOc1> were up 35 cents at $47.66
a barrel at 1058 GMT, having touched a two-week high of $47.83 earlier
in the session.
U.S. West Texas Intermediate (WTI) crude <CLc1> was up 33 cents at
$45.07 a barrel. It registered an intraday high of $45.24, also a
"After the steep drop in oil prices of recent weeks, I believe that
especially hedge funds saw nice buying momentum and lower U.S. crude
production was the trigger to act," said Hans van Cleef, senior energy
economist at ABN Amro.
U.S. government data showed on Wednesday that domestic crude production
dropped by 100,000 barrels per day (bpd) to 9.3 million bpd last week,
the steepest weekly fall since July 2016.
Some analysts and traders said the decline was related to temporary
factors such as the shutdown of some oil production sites due to
Tropical Storm Cindy in the Gulf of Mexico and maintenance in Alaska.
"These production outages are therefore likely to be made good again in
the coming weeks, meaning that a noticeable rise in U.S. oil production
can be expected. It is thus doubtful whether (the) price rise will
really prove lasting," said analysts at Commerzbank.
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A gas pump is seen hanging from the ceiling at a petrol station in
Seoul June 27, 2011. REUTERS/Jo Yong-Hak
Global oil supplies remain ample despite output cuts by the Organization of the
Petroleum Exporting Countries and other producers of 1.8 million bpd since
OPEC and its allies, trying to reduce a crude glut, agreed in May to extend the
supply cut through March 2018. OPEC has exempted Nigeria and Libya from the
curbs due to unrest that has sapped those countries' production.
Royal Dutch Shell on Wednesday lifted force majeure on Nigerian Bonny Light
crude exports after pipeline repairs.
Analysts at investment bank Goldman Sachs said rising Nigerian and Libyan
output, as well as a rise in U.S. shale oil drilling, would slow the drawdown in
"This creates risks that the normalization in inventories will not be achieved
by the time the OPEC cut ends next March. We expect this will leave prices
trading near $45 (a barrel) until there is evidence of a decline in the U.S.
horizontal oil rig count, sustained stock draws or additional OPEC production
cuts," they wrote.
(Additional reporting by Naveen Thukral in Singapore; Editing by Dale Hudson and
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