Oil settles lower as U.S. crude output up, China imports down

Ivan Schwartz
November 11, 2017

The arrest orders were made by a panel Saudi King Salman bin Abdulaziz Al Saud formed on Saturday, headed by Crown Prince Mohammed bin Salman.

"The political situation in Saudi Arabia remains sufficiently volatile to spike crude values by at least 50 cents at any given time as was the case (Thursday)", Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a report, noting he did not expect Friday's oil rig count to exert much price impact.

The Organization of the Petroleum Exporting Countries' 2017 World Oil Outlook showed the group predicts demand for its crude will rise more slowly than previously expected in the next two years, as higher prices from its supply policy stimulate output growth from rival producers.

"Growing confidence in the market that the upcoming OPEC meeting will result in an extension to the output-cut agreement is also supporting prices", he said.

China's October oil imports fell to just 7.3 million bpd from a near record-high of about 9 million bpd in September, according to data from the General Administration of Customs.

Oil prices held steady on Thursday after falling late in the previous session, supported by ongoing supply cuts led by OPEC and Russian Federation.

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There are also expectations in the market that OPEC's next meeting on November 30 will agree to extend cuts beyond the current expiry date in March 2018.

"With the OPEC/non-OPEC deal extension beyond March 2018 a certainty, prices may become stronger and temporarily reach the $65-$70 per barrel range in 2018", said energy consultancy FGE. Still, traders expressed caution that the oil price rally may have run its course after pushing up Brent more than 40 percent since July.

US production was forecast to rise to 9.2 million barrels per day (bpd) in 2017 and a record 10.0 million bpd in 2018 from 8.9 million bpd in 2016, according to federal energy projections this week.

Brent futures have gained around 14 percent in the last month alone, propelled largely by evidence that output cuts by OPEC and its partners are reducing the global oil glut.

"It doesn't matter how bullish the fundamentals are ... when an asset goes vertical there is always room for a pullback and consolidation of recent price moves", said Greg McKenna, chief market strategist at brokerage AxiTrader.

Other reports by GizPress

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