OPEC Keeps Oil Market Guessing Over Further Action on Cuts

Oil prices advanced to the highest level in months Wednesday as expectations that OPEC will decide to extend its production-cut deal outweighed pressure from a third-straight weekly jump in USA crude supplies and a hefty rise in production.

Crude oil prices have risen approximately 20 per cent since OPEC and Non-OPEC agreed a six-month production cut of 1.8 MBPD in 2016.

Market participants were looking ahead to the U.S. Energy Information Administration's latest report on crude oil inventories due later Wednesday, after last week's larger than expected storage build.

In the US, an Energy Information Administration report Wednesday showed crude inventories expanded by 4.59 MMbbl last week, while both gasoline and distillate stockpiles tumbled. U.S. crude oil inventories rose for the third straight week.

Oil prices advanced Wednesday amid ongoing optimism that production cuts have shown some success in bringing down global inventories.

West Texas Intermediate (WTI) crude futures settled up 2 cents at $49.91, close to Thursday's near-four month high of $50.50."They're still working out the aftermath of the hurricanes", said John Kilduff, a partner at Again Capital Management in NY.

Oil prices held steady on Tuesday after an early rally that took Brent to near-five month highs above $55 a barrel and USA crude above $50 on supply drops announced by Iraq and Saudi Arabia ahead of an OPEC meeting to discuss production cuts.

Gasoline inventories fell by 2.1 million barrels and distillate fuels, which include diesel and heating oil, dropped by 5.7 million barrels.

"Oil production also improved significantly to 9.51 million barrels per day, which reduced to 8.78 million bpd after it was affected by storm Harvey". "The report shows that we're recovering from the hurricane", Rob Haworth, who helps oversee $142 billion at U.S. Bank Wealth Management in Seattle, said by telephone.

The commodity got an additional boost on Wednesday, when Iraqi oil minister Jabar al-Luaibi said that his country and other OPEC members are considering options to its production-cut agreement, including an extension beyond March and a deeper output cut.

Some cartel members-including less compliant nations like Iraq-have indicated in recent weeks that they would be open to extending the production cuts after the deal expires early next year, but analysts and investors don't expect a final decision until OPEC's next official gathering in November.

Elsewhere, gasoline futures gained slipped 0.18% to $1.662 a gallon, while natural gas futures fwere steady at $3.123 per million British thermal units.

  • Joey Payne