Oil prices held steady on Thursday as U.S. crude inventories fell despite a rise in production, while outside the United States an OPEC-led supply cut continued to tighten the market.
Brent futures, the international benchmark for oil prices, were at $60.52 per barrel at 0540 GMT, up 3 cents from their last close. Brent has risen by more than a third since its 2017-lows last June.
U.S. West Texas Intermediate (WTI) crude was at $54.26 a barrel, down 4 cents from the last settlement, but still some 30 percent above its 2017-low in June.
Confidence has been fuelled by an effort this year lead by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets.
Saudi Arabian Energy Minister Khalid al-Falih said on Thursday in Thailand that supply and demand balances continued to tighten and global oil inventories were falling, while compliance with the OPEC-led pact to curb supplies has been “excellent”.
However, official trade data from Russia on Thursday showed that the country’s oil output stood at 10.93 million bpd in October, up from 10.91 million bpd in September.
Yet overall, global oil markets have been slightly undersupplied during the past quarters, resulting in fuel inventory drawdowns.
The pact to withhold supplies runs to March 2018, but there is growing consensus to extend the deal to cover all of next year.
Oil was also supported by falling U.S. commercial crude inventories despite rising output.
U.S. commercial crude oil inventories fell by 2.4 million barrels in the week to Oct. 27 to 454.9 million barrels, according to data from the Energy Information Administration on Wednesday. <C-STK-T-EIA>
“U.S. crude inventories are back on a downward trend after disruptions from hurricane Harvey caused a small build,” said William O’Loughlin, analyst at Rivkin Securities.
This came despite a 46,000 bpd increase in production to 9.6 million bpd. U.S. crude output is now up over 13 percent since mid-2016. <C-OUT-T-EIA>
The EIA said that a record 2.1 million bpd of U.S. crude was exported in the latest week.
Traders said this was due to WTI’s wide discount to Brent which make exports attractive. <CL-LCO1=R>
Despite the generally bullish sentiment, some analysts warned of too much confidence in higher prices.
“The overbought nature of the daily RSI’s (relative strength index).. has made both contracts (Brent and WTI) vulnerable to short-term profit taking on the headline-driven news,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
(Reporting by Henning Gloystein; Editing by Richard Pullin)