Oil Gains as OPEC Said to Work on Exit Plan Alongside Extension

Futures gained 0.8 percent in New York after advancing a second session Monday. OPEC was said to be working on ways to eventually phase out cuts without flooding the market. The group is set to decide next month whether to extend its production curbs beyond March. U.S. crude inventories probably dropped by 3 million barrels last week, a fifth straight decrease, according to a Bloomberg survey before government data due Wednesday.

Oil is holding above $50 a barrel as speculation mounts that members of the Organization of Petroleum Exporting Countries will prolong supply curbs to prevent the market returning to surplus next year. At the same time, there are signs that growth in U.S. shale oil, which has kept a lid on prices, may be slowing as drilling declines.

“The market will probably take it positively if OPEC can explain their thinking on how it works when they’re not voluntarily holding back oil from the market anymore,” Torbjorn Kjus, analyst at DNB Markets said. “There’s a fear in the market that when the deal runs out, then it’s every man for himself again, and that’s not what they’re thinking.”

Inventories in the U.S., already at the lowest level since January 2016, probably dropped by 3 million barrels last week, a fifth straight decrease, according to a Bloomberg survey before government data due Wednesday. Stockpiles at Cushing, Oklahoma, the delivery point for WTI, have expanded since the end of August to near 64 million barrels.
more at: https://www.bloomberg.com/news/articles/2017-10-23/oil-holds-gains-near-52-as-u-s-stockpiles-seen-extending-drop

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Oil has struggled to recover losses from last month’s broader market slump after topping $66 a barrel in January. While a brighter economic outlook has underpinned demand expectations following a better-than-expected U.S. jobs report, expanding American production remains a challenge to the Organization of Petroleum Exporting Countries and its allies, which are trying to prop up prices via output curbs. Production from shale regions will reach 6.95 million barrels a day next month, the U.S. Energy Information Administration said in its monthly drilling report. The Permian Basin is seen leading the way with an 80,000-barrel increase. Total American output has passed 10 million barrels a day, beating a record set in 1970. Click Read More below for additional information.

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