Oil near $50 as traders gauge OPEC's mixed signals

Oil near $50 as traders gauge OPEC's mixed signals

It's hard to understand why traders have been so inspired of late to boost prices based on rumours but no concrete vows swirling among OPEC members: for example, while Jabbar al-Luaibi, oil minister for Iraq, was reported on Wednesday to be among a group that think the cuts should be increased by 1 percent, he was also quoted as saying with regards to an output extension, "It is premature to come to a conclusion or decision seven months before March".

Oil hovered close to $50 a barrel amid conflicting signals from OPEC ministers about whether an extension of supply limits is on the table for the cartel's meeting on Friday.

Oil rose was on course for its largest third-quarter gain in 13 years as prices rose yesterday after the Iraqi oil minister said that Opec and its partners are considering extending or deepening output cuts aimed at reducing a global supply glut.

Elsewhere, Brent oil for November delivery on the ICE Futures Exchange in London was up 19 cents or about 0.34% at $56.10 a barrel, after hitting a fresh five-month high of $56.30 overnight.

Oil prices settled almost flat on Thursday, the eve of a meeting of major oil-producing countries in Vienna to discuss whether they will extend production limits that have helped reduce the global crude glut.

Matt Smith, director of commodity research at ClipperData, told MarketWatch that the "solid build to crude stocks was due to ongoing lower crude demand via the medium of stymied refinery runs, and buoyed by [a Strategic Petroleum Reserve] release" of oil. Distillate inventories, which include heating oil and diesel fuel, were seen falling 1.6 million barrels last week, the poll showed.

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In its September report, the IEA revised upwards its estimated demand growth for 2017 to 1.6 million barrels per day, Brent crude oil has averaged just above $50 a barrel through the first 8 months of this year.

Gasoline stockpiles were down 2.1 million barrels for the week, while distillate stockpiles fell 5.7 million barrels, according to the EIA. "The question now is whether the $50-per-barrel WTI price is attractive enough for shale producers to sell their production forward". However, the recovery in USA oil production after Hurricane Harvey will remain the dominant bearish factor capping price gains.

Conversely, due to demand, Nolting says prices won't fall dramatically either: "So I think it's quite stable in the oil sector".

Some market participants, however, think the amount of crude swirling in the market in the aftermath of Hurricane Harvey was being underestimated.

USA crude imports rose last week by 734,000 barrels per day.

The EIA also said total domestic crude output rose by 157,000 barrels a day to 9.510 million barrels a day.

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