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UPDATE 2-Oil markets stable on tighter U.S. market, expected extension of OPEC supply cuts

Published 19/10/2017, 05:50 pm
Updated 19/10/2017, 06:00 pm
© Reuters.  UPDATE 2-Oil markets stable on tighter U.S. market, expected extension of OPEC supply cuts

* U.S. crude stocks down 5.7 mln barrels at 456.49 mln barrels

* U.S. production down 11 pct at 8.4 mln bpd

* OPEC expected to extend supply cuts next year (Adds ING price forecast, updates prices)

By Henning Gloystein

SINGAPORE, Oct 19 (Reuters) - Oil prices were stable on Thursday, supported by ongoing OPEC-led supply cuts, tensions in the Middle East and lower U.S. production due to hurricane-enforced closures.

Brent crude futures LCOc1 were at $58.19 at 0641 GMT, close to their last close, and around 30 percent above mid-year levels.

U.S. West Texas Intermediate (WTI) crude CLc1 was at $52.03 per barrel, also close to its last settlement, but almost a quarter higher than in June.

The U.S. Energy Information Administration said on Wednesday that U.S. crude inventories fell by 5.7 million barrels in the week to Oct. 13, to 456.49 million barrels. C-STK-T-EIA

U.S. output slumped by 11 percent from the previous week to 8.4 million barrels per day (bpd), its lowest since June 2014 as production had to be shut because of Hurricane Nate, which hit the U.S. Gulf Coast earlier in October. said there was also a risk to supply from political instability in areas ranging from the Middle East to South America.

"Geopolitical risk has returned to the oil market... As a result, we have raised our ICE Brent forecast for 4Q17 from $45 per barrel to $52 per barrel," Dutch bank ING said on Thursday.

"The 'Fragile Five' petrostates - Iran, Iraq, Libya, Nigeria and Venezuela - continue to see supply disruption potential, with northern Iraq crude exports at risk due to an escalation of tensions between the (Kurdistan Regional Government), Baghdad and Turkey, while the U.S. has decertified the 2015 Iran nuclear deal," said U.S. bank Citi. forces this week captured the Kurdish-held oil city of Kirkuk, responding to a Kurdish independence referendum, triggering fears of supply disruptions. to these tensions, U.S. President Donald Trump last week refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide further action against Tehran.

During the previous round of sanctions against Iran, some 1 million bpd of oil was cut from markets. analysts see crude supply tightening further as the Organization of the Petroleum Exporting Countries (OPEC) and partners, including Russia, are expected to extend a deal to curb production beyond its expiry date next March. is desperate to bring the market into equilibrium and mop up as much of the excess stockpiles ... I am expecting OPEC and Russia to agree on a further 9-month extension to production cuts," said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.

Political risk consultancy Eurasia Group said Saudi Arabia's plans to list state-owned oil giant Aramco would increase pressure for extended production cuts.

"Saudi Arabia will seek a production sharing agreement extension ... as an IPO (of Saudi Aramco) remains part of the long-term plan," the consultancy said.

"Price stability will remain a core part of the strategy ... The government still needs higher oil revenue to support its spending needs and reform programme."

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http://reut.rs/2xQiMDO

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