Oil prices soar on output-cut expectation

29 October, 2017, 04:01 | Author: Lora Ball
  • A view of Mexico's national oil company Pemex's refinery in Salamanca

Brent crude, the global benchmark, settled up 96 cents or 1.7 percent to $58.33 a barrel.

Brent crude edged up after top exporter Saudi Arabia reiterated its determination to end a three-year supply glut.

Crude inventories rose by 856,000 barrels in the week to October 20, the EIA said.

Preliminary data and early reads on supply and demand indicated a slight drain in US crude oil inventories.

Oil prices were little changed after erasing earlier losses by midday on Thursday as Middle East tensions and Saudi comments about ending a global supply glut offset an unexpected increase in U.S. crude inventories and high USA production and exports.

Southeast Asia's net crude oil imports will more than double to 5.5 million bpd by 2040 as the region adds new refining capacity to meet rising demand while regional oil output falls, according to the International Energy Agency (IEA).

The spread, or difference, between Brent and WTI means US oil is more competitive against other benchmarks in some markets.

The EIA data also showed US oil production had returned to pre-hurricane levels, climbing to more than 9.5 million barrels a day.

RBOB futures rose 1.1 per cent to $1.7341 a gallon.

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Crude oil pries fell in Asia on Friday with the market cautious as OPEC member and major producer Venezuela reportedly faces problems making payments on bonds issued to the state oil company PDVSA and with USA rig count data ahead.

On Tuesday, Saudi Arabian Energy Minister Khalid al-Falih on Tuesday raised the prospect of prolonged output restraint even after the end of an OPEC-led pact to cut supplies.

Saudi Arabia and Russian Federation both declared their support for extending a global deal to cut oil supplies for another nine months, an OPEC (Organization of the Petroleum Exporting Countries)'s official said on Friday, according to Reuters.

This situation can be fixed as early as November 7 at the OPEC meeting in Vienna, Austria.

Traders were apparently not swayed by U.S. Energy Information Administration (EIA) data showing on Wednesday that U.S. crude inventories rose by 856,000 barrels last week compared to an expected 2.6 million barrel draw; U.S. crude production also rose 1.1 million barrels per day (bpd) last week to 9.5 million bpd after a decline due to Hurricane Nate, while U.S. oil exports hit a new record four-week average of 1.7 million bpd.

"The trend is up, but getting exhausted", said Robin Bieber, technical chart analyst and a director of London brokerage PVM Oil Associates.

Disruptions to exports from Iraq, OPEC's second-largest producer, have supported oil.

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