Oil prices steady near 2-year highs as market tightens
Oil prices steadied near two-year highs on Thursday as supply cuts by OPEC and other major exporters tightened the market and drained inventories.
Benchmark Brent crude was down 20 cents at $60.29 per barrel by 1345 GMT. On Wednesday, Brent reached $61.70, its highest intraday level since July 2015. The contract is up by more than a third from its 2017-lows in June.
U.S. light crude was unchanged at $54.30, almost 30 percent above its 2017-lows in June.
"The upswing in oil prices appears to have ended for the time being," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.
Some investors had booked profits after the recent price rally, traders said, but the market outlook remained upbeat.
Confidence has been fuelled by an effort this year lead by the Organization of the Petroleum Exporting Countries 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 supply and demand balances were tightening and oil inventories falling, while compliance with the OPEC-led pact to curb supplies had been "excellent".
Overall, oil markets have been slightly undersupplied this year, resulting in 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.
"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 9.55 million bpd. U.S. crude output is now up over 13 percent since mid-2016.
Goldman Sachs said it expected year-on-year U.S. oil production growth of 0.8 million to 0.9 million bpd at year-end 2017. That would put end-2017 output at 9.6-9.7 million bpd, close to its highest for at least three decades.
The EIA said a record 2.1 million bpd of U.S. crude was exported in the latest week.
Traders said this was due to U.S. crude trading at a wide discount to Brent, making exports attractive.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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