Article Highlights

  • U.S. crude stocks down 5.7 mln barrels to 456.49 mln barrels
  • U.S. production down 11 pct at 8.4 mln bpd
  • OPEC expected to extend supply cuts next year
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Oil prices were firm on Thursday, supported by ongoing supply cuts led by OPEC, tensions in the Middle East and lower production in the United States as a result of hurricane-enforced closures.

Brent crude futures, the international benchmark for oil prices, were at $58.25 at 0029 GMT, up 10 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $52.11 per barrel, up 7 cents, or 0.1 percent.

The U.S. Energy Information Administration (EIA) said late on Wednesday that crude inventories fell by 5.7 million barrels in the week to Oct. 13, to 456.49 million barrels.

U.S. output slumped by 11 percent from the previous week to 8.4 million barrels per day (bpd), its lowest level since June 2014 as numerous rigs had to be shut because of Hurricane Nate, which hit the U.S. Gulf coast earlier in October.

Beyond the drop in U.S. production and tensions in Iraq and between the United States and Iran, analysts expect markets to further tighten as the Organization of the Petroleum Exporting Countries (OPEC) and partners, including Russia, are expected to extend a deal to curb production beyond its expiry date at the end of March 2018.

“OPEC is desperate to bring the market into equilibrium and mop up as much of the excess stockpiles, which was caused as a result of the free for all production approach over the last few years. I am expecting OPEC and Russia to agree on a further 9-month extension to production cuts,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.

Political risk consultancy Eurasia Group said Saudi Arabia’s plans to list state-owned oil giant Aramco also favoured extended production cuts in order to prop up oil prices.

“Saudi Arabia will seek a production sharing agreement extension … as an IPO (of Saudi Aramco) remains part of the long-term plan … price stability will remain a core part of the strategy … The government still needs higher oil revenue to support its spending needs and reform programme,” it said.