Oil prices firm on expected OPEC cut extension
Oil prices firmed on Wednesday after a reported fall in U.S. crude inventories and on expectations that an OPEC-led production cut aimed at tightening the market will be extended beyond March 2018.
Brent crude futures
U.S. West Texas Intermediate (WTI) crude futures were at $57.31 a barrel, up 48 cents, or 0.8 percent.
Traders said markets were generally well supported by an effort led by the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC producers led by Russia to restrain output in a bid to end a global supply overhang.
The deal to curb output is due to expire in March 2018, but OPEC will meet on Nov. 30 to discuss the outlook for the policy.
"All eyes remain focussed on the OPEC`s flux and reflux heading to Vienna as the meeting`s outcome will ultimately determine oil prices` near-term fate," said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA.
J.P. Morgan said in its 2018 commodities outlook, released late on Tuesday, that "oil markets in 2018 will be balanced on the back of extended OPEC-NOPEC production cuts," but added that without extended cuts "markets will be in surplus."
The U.S. bank said "we expect Brent to trade at the top of the $40 to $60 per barrel range, with Brent averaging $58 per barrel in 2018. WTI is expected to average $54.6 per barrel."
Traders said there was also some price support from a weekly report on Tuesday by the American Petroleum Institute which said U.S. crude inventories fell by 6.4 million barrels in the week to Nov. 17. [nZXN045X00]
Despite this, traders said crude markets were somewhat capped by rising production in the United States, which has jumped by almost 15 percent since mid-2016 to 9.65 million barrels per day.
"While an extension of the OPEC deal to limit production may inspire oil bulls short-term, the rising U.S. output is likely to present headwinds, ultimately limiting upside gains," said Lukman Otunuga, analyst at futures brokerage FXTM.
The latest official U.S. production and inventory data is scheduled for release later on Wednesday.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Power of Compounding: How many years will it take to reach Rs 3 crore corpus if your monthly SIP is Rs 4,000, Rs 5,000, or Rs 6,000
Power of Compounding: Salary Rs 25,000 per month; is it possible to create over Rs 2.60 crore corpus; understand it through calculations
Reduce Home Loan EMI vs Reduce Tenure: Rs 75 lakh, 25-year loan; which option can save Rs 25 lakh and 64 months and how? Know here
Top 7 Large and Mid Cap Mutual Funds with Best SIP Returns in 5 Years: No. 1 fund has turned Rs 15,000 monthly SIP investment into Rs 20,54,384; know about others
New Year Pick by Anil Singhvi: This smallcap stock can offer up to 75% return in long term - Check targets
PSU Oil Stocks: Here's what brokerage suggests on these 2 largecap, 1 midcap scrips - Buy, Sell or Hold?
08:21 AM IST