Oil prices steady as Saudis pump more; OPEC sees strong demand

Oil prices steady as Saudis pump more; OPEC sees strong demand

Oil prices steady as Saudis pump more; OPEC sees strong demand

Crude oil in floating storage is declining, showing that the market is rebalancing, OPEC Secretary-General Mohammad Barkindo said.

When the futures market shows near-dated oil contracts trading above those further out, a pricing structure known as backwardation emerges, which indicates that traders believe supply is becoming restricted and encourages anyone storing up physical oil to release their stocks. Brent closed 2 percent higher the previous day.

U.S. West Texas Intermediate (WTI) crude futures rose 38 cents, or 0.8 percent, to $51.30 a barrel.

Over the weekend, OPEC Secretary-General said that consultations were already under way to discuss extending the agreement, and even hinted that additional oil-producing countries may join the deal. Saudi Arabia and Russian Federation, he said, are leading the initiative to bring in more producers.

In a deal aimed at clearing the glut, Opec is curbing output by about 1.2 million bpd, while Russian Federation and other non-Opec producers are cutting half as much, until March 2018.

For 2017, it forecast a rise of 380,000 bpd to 9.24 million bpd.

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In the meantime, Investment Bank Barclays raised its Brent crude price outlook for the first quarter of 2018 to 56 dollars a barrel.

Saudi Arabia trimmed crude supplies to its biggest buyers in Asia, sources told Reuters, a sign it is meeting its cut commitment. For 2018, oil demand is expected to rise by 420,000 bpd vs 400,000 bpd previously.

Longer term, Barclays said it expected "a return to build mode next year", while PVM's Stephen Brennock said the International Monetary Fund viewed the economic recovery as being "on thin ice".

Currently, the EIA expects total US crude oil production to average 9.3 million bpd for 2017 and 9.8 million bpd in 2018, which would mark the highest annual average production in USA history, surpassing the previous record of 9.6 million bpd from 1970.

Speaking at the Reuters Global Commodities Summit, Vitol CEO Ian Taylor said US output would climb another 500,000 to 600,000 bpd next year before flattening. He said the picture was "not clear because you still have hurricane related news".

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