On Thursday, oil prices become stable as tighter market looms in 2017 because of intended output reductions led by The Organization of the Petroleum Exporting Countries (OPEC) and Russia, after sudden drops earlier following Wednesday’s U.S. interest rate increase that drove investors out of commodities.
International Brent crude oil futures were trading at $54.02 a barrel at 0428 GMT, increase 12 cents from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were at $51.02 per barrel, virtually flat with their last settlement.
On Thursday, ANZ bank said that oil markets would change into a substantial deficit in the 1st quarter of 2017, if the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia go through with their broadcasted reductions of approximately 1.8 million barrels per day (bpd) in production.
“This will likely push oil prices well above $60 per barrel early next year,” it said.
Crude prices also received some support from declining U.S. crude inventories.
Data from the U.S. Energy Information Administration (EIA) presented that commercial crude inventories the previous week dropped by 2.56 million barrels to 483.19 million barrels.
However, traders stated it is far from sure whether Organization of the Petroleum Exporting Countries (OPEC) and other producers will follow through with their announced reductions.
OPEC pumped 33.87 million barrels per day (bpd) the previous month, according to statistics it collects from secondary sources, up 150,000 barrels per day (bpd) from October, Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report on Wednesday.
That shows the group’s production has continued to increase, adding to a global surplus, in advance of the January start of its 1st supply reduction deal since 2008. That could elevate questions regarding its ability to comply fully with the agreement.
After a sudden decline on Wednesday, more stable prices came on Thursday when crude drop over 3% because of a strong dollar.
The dollar increase to close to 14 year peak against a basket of other currencies as the U.S. Fed Reserve increased rates for the 1st time in a year.
“The Federal Reserve hike … saw bond yields rise, dealing a blow to commodities in general,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
“A stronger greenback, in which oil is traded, can hit crude demand as it makes fuel purchases more expensive for countries using other currencies at home,” according to the reports.
On Additional News
On Thursday, crude prices decline in Asia as Organization of the Petroleum Exporting Countries (OPEC) production shows continued increased and the Fed position on interest rate hikes in 2017 brings the demand side into attention.
At the end of the week, rig count statistic from oilfield services provider Baker Hughes will set the short-term tone. The previous week, data presented the U.S. rig count up 27 rigs from the previous week to 624, with oil rigs up 21 to 498.
On Wednesday, the U.S. Department of Energy reported a 2.563 million barrel drop in the U.S crude inventories, more than the 1.584 million barrel drop seen, while distillate stockpiles, including diesel and heating oil, dropped by 762,000 barrels, and gasoline supplies increased 497,000 barrels.
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