Oil rises on signs of tighter market

Ivan Schwartz
October 14, 2017

The nation has spent around $24 billion building its crude reserves since 2015 and now holds around 850 million barrels of oil in inventory, according to the International Energy Agency (IEA).

WTI light sweet crude oil was up 90 cents at $51.54 a barrel, resuming a recent rally.

Brent futures were up $1.03, or 1.8 percent, at $57.28 a barrel by 12:12 p.m. EDT (1612 GMT).

Chinese oil imports fell by 179,000 barrels a day in August, but remained above 8 million barrels a day. The news alleviated investor concern that demand in the world's largest crude importer might be waning amid faltering economic growth.

Prices were also supported Friday by concerns that political developments in Iran and Iraq could reduce the global oil supply.

U.S. president Donald Trump is also expected to make an announcement on the Iran nuclear deal, which is due for renewal this weekend. Gasoline stockpiles, on the other hand, unexpectedly increased by 2.5 million barrels. The central government has condemned the Kurds' late September independence referendum. Kurdistan exports over 500,000 barrels of crude a day.

That's a view shared by a variety of market participants and analysts alike.

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To help keep oil prices around these levels, or closer to the preferred $60 per barrel level, will likely require more discussions and co-operation over production among all oil producing countries.

The spike in prices Friday followed two closely watched, somewhat conflicting oil market reports this week, from the Organization of the Petroleum Exporting Countries and the International Energy Agency.

The forecasts assume that Libya and Nigeria's production will remain at current levels and USA shale output will expand by no more than 500,000 barrels a day next year, two of the people said.

OPEC is expected to extend the oil-curb deal which is scheduled to end on 31 March next year.

There is "little doubt that the leading producers have recommitted to do whatever it takes to underpin the market and to support the long process of rebalancing", the IEA said in its report.

Many oil traders have said the reason OPEC has been compliant with the production cut agreement was because Saudi Arabia wanted the cuts to work to prop up oil prices ahead of the Aramco IPO. Analysts had forecast a draw of 400,000 barrels.

Other reports by GizPress

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