Oil slips from highs but still strong on OPEC-led cuts
Send a link to a friend
[November 02, 2017]
By Christopher Johnson
LONDON (Reuters) - Oil prices slipped from
two-year highs on Thursday but sentiment remained strong as supply cuts
by OPEC and other major exporters tightened the market and drained
Benchmark Brent crude <LCOc1> was down 25 cents at $60.24 a barrel by
1215 GMT. On Wednesday, Brent reached $61.70, its highest intraday level
since July 2015. The contract is up more than a third since its
2017-lows in June.
U.S. light crude <CLc1> was 5 cents lower at $54.25, almost 30 percent
above its 2017-low in June.
"The upswing in oil prices appears to have ended for the time being,"
said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.
Some investors had booked profits after the recent price rally, traders
said, but the market outlook remained upbeat.
Confidence has been fueled by an effort this year lead by the
Organization of the Petroleum Exporting Countries and Russia to hold
back about 1.8 million barrels per day (bpd) in oil production to
Saudi Arabian Energy Minister Khalid al-Falih said on Thursday supply
and demand balances were tightening and oil inventories falling, while
compliance with the OPEC-led pact to curb supplies had been "excellent".
Overall, oil markets have been slightly undersupplied this year,
resulting in inventory drawdowns.
The pact to withhold supplies runs to March 2018, but there is growing
consensus to extend the deal to cover all of next year.
Oil was also supported by falling U.S. commercial crude inventories
despite rising output.
[to top of second column]
An oil rig drilling a well at sunrise, owned by Parsley Energy Inc.
near Midland, Texas, U.S., May 3, 2017. Picture taken May 3, 2017.
U.S. commercial crude oil inventories fell by 2.4 million barrels in the week to
Oct. 27 to 454.9 million barrels, according to data from the Energy Information
"U.S. crude inventories are back on a downward trend after disruptions from
hurricane Harvey caused a small build," said William O'Loughlin, analyst at
This came despite a 46,000 bpd increase in production to 9.55 million bpd. U.S.
crude output is now up over 13 percent since mid-2016. <C-OUT-T-EIA>
Goldman Sachs said it expected year-on-year U.S. oil production growth of 0.8
million to 0.9 million bpd at year-end 2017. That would put end-2017 output at
9.6-9.7 million bpd, close to its highest for at least three decades.
The EIA said a record 2.1 million bpd of U.S. crude was exported in the latest
Traders said this was due to U.S. crude trading at a wide discount to Brent,
making exports attractive. <CL-LCO1=R>
(Additional reporting by Henning Gloystein in Singapore; Editing by Mark Potter
and David Evans)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.