Wednesday, 18 July, 2018

Crude Oil Steady As OPEC Sees Strong Demand

Nellie Chapman | 14 November, 2017, 18:05

If there is a decision to extend the supply cut it will be until the end of 2018, said the Omani oil minister, Mohammed bin Hamad al-Rumhi, adding that he did not think producers would agree to deepen the curbs.

"The excess of OECD oil inventories over their five-year average levels has fallen by more than 50 percent in 2017, with inventories now at around 160 million barrels".

Oil prices settled mixed on Monday as geopolitical tension in Middle East offsets rising US output.

At a separate energy industry conference earlier Monday morning, al-Mazroui said the current OPEC-led supply cuts helped to remove almost 180 MMBbl of crude from storage in less than a year, CNBC reported.

OPEC members were reportedly forming a consensus around extending by nine months their production cuts deal with other crude exporters. Meanwhile, OPEC once again prepares for its November 30 meeting in Vienna, where most expect it will announce another extension of its oil production cut agreement.

The exporters reached the deal last December and had already extended the agreement once through March 2018.

Opec raised estimates for the amount of crude it will need to pump to meet demand next year by 400,000 barrels a day to 33.4 million a day, according to a monthly report yesterday from the group.

It also said industrialised countries' September commercial oil inventories, a key marker OPEC uses to measure market balance, fell by 23.6 million barrels to 2.985 billion barrels. The fourth-largest member of the Organization of Petroleum Exporting Countries staked out its position a day after OPEC Secretary-General Mohammad Barkindo said that caps on output are the "only viable option" to restore stability to the market.

The country's total exports declined by 9 per cent on a year-on-year basis in the first seven months of this year, to 197.08 million barrels from 216.46 million barrels.

Investors increasingly opted not to bet on higher oil prices, following a report from the International Energy Agency showing it expects rising United States shale oil and gas production to at least be among the biggest gains in the history of the industry.

Crude oil stocks in the USA are seen down 2.850 million barrels, while distillates are expected to post a drop of 1.775 million barrels and gasoline inventories are seen down 1.025 million barrels.

Other regional concerns include the war in Yemen and growing tensions between Saudi Arabia and Iran is a concern to investors too.

Bahrain said Iran was behind an explosion in its main oil pipeline.