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Rising US shale output weighs down oil prices, but OPEC cuts prevent fall

US crude inventories rose for a second week in a row, building by 1.9 million barrels in the week to November 10 to 459 million barrels.

Reuters  |  Singapore 

Increase US crude output pull down oil price, but OPEC cuts support market

Oil markets today,  weighed down by rising production and inventories, but prices were prevented from falling by expectations that will extend an ongoing production cut during a meeting at the end of this month.

Brent futures , the international benchmark for oil prices, were at $61.89 per barrel at 0100 GMT, 2 cents above their last close.

West Texas Intermediate (WTI) futures were at $55.33 a barrel, unchanged from their last settlement.

Both benchmarks have lost almost 5 per cent in value since hitting 2015 highs last week.

Traders said that was capped by rising output and inventories.

inventories rose for a second week in a row, building by 1.9 million barrels in the week to November 10 to 459 million barrels, the government's Energy Information Administration (EIA) said on Wednesday.

That compared to analyst expectations in a Reuters poll for a decrease of 2.2 million barrels.

oil production hit a record of 9.65 million barrels per day (bpd), meaning output has risen by almost 15 percent since their most recent low in mid-2016.

Despite this, analysts said prices were relatively well supported, largely due to efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to withhold oil production in order to tighten the market and prop up prices.

The deal is due to expire in March 2018, but will meet on November 30 to discuss policy, and it is expected to agree with an extension of the cuts.

"OPEC, led by Saudi ... will look to support the market, especially until the sale of Aramco is complete. If sanctions against are executed, it will drive the price significantly higher," said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers in Sydney.

 

 

First Published: Thu, November 16 2017. 09:08 IST
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