Oil hits highest since mid-2015 as OPEC sticks to supply
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[November 01, 2017]
By Amanda Cooper
LONDON (Reuters) - Oil rose to its highest
since mid-2015 on Wednesday as data showed OPEC has significantly
improved compliance with its pledged supply cuts and Russia is also
widely expected to keep to the deal.
Brent crude futures <LCOc1> were up 59 cents at $61.53 per barrel at
0905 GMT, having hit a session peak of $61.70 earlier, the highest since
U.S. West Texas Intermediate (WTI) crude <CLc1> was at $55.12 a barrel,
up 74 cents.
The oil price gained 7 percent in October, marking the fourth
consecutive month of gains.
"The bulls have it and momentum is strong," Saxo Bank senior manager Ole
"We know how oil can easily run ahead of what is fundamentally justified
and we've seen that in both directions in the last couple of years," he
said. "We really need to see demand growth pick up even more strongly
than what is currently expected for the bullish outlook for to be
Optimism has been fueled by an effort this year lead by the Organization
of the Petroleum Exporting Countries (OPEC), Russia and other producers
to hold back about 1.8 million barrels per day (bpd) in oil production
to tighten markets.
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An oil pump jack is seen at sunset in a field outside Scheibenhard,
near Strasbourg, France, October 6, 2017. REUTERS/Christian Hartmann
OPEC's October output fell by 80,000 bpd to 32.78 million bpd, putting adherence
to its pledged supply curbs at 92 percent, up from September's 86 percent.
Analysts and traders expect Russia to stick to its agreement to curb its oil
output by 300,000 bpd from 11.247 million bpd reached in October 2016.
Saudi Arabia and Russia are considering extending the agreement to potentially
cover all of next year.
Should participants after that return to full capacity and U.S. output also
grow, a supply glut could return.
"We could rapidly ... go from a predicted deficit of around 260,000 barrels to a
surplus of close to 1.5 million barrels. Prices would undoubtedly collapse,"
said Matt Stanley, a fuel broker at Freight Investor Services.
Another factor will be U.S. output, which has risen by almost 13 percent since
mid-2016 to 9.5 million bpd. <C-OUT-T-EIA>
"U.S. crude oil production is 410,000 bpd below the April 2015 peak of 9.62
million bpd. We expect production to surpass this level before year-end,"
Barclays bank said.
(Additional reporting by Henning Gloystein in SINAGPORE; Editing by Louise
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