October 24, 2017 by Angelina Rascouet
Oil rose above $52 a barrel as OPEC was said to be working on an exit strategy alongside discussions on extending production cuts to the end of next year.
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.”
West Texas Intermediate for December delivery was at $52.25 a barrel on the New York Mercantile Exchange, up 35 cents, at 6:20 a.m. local time. Total volume traded was about 7 percent below the 100-day average. The contract rose 6 cents to close at $51.90 on Monday.
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Brent for December settlement gained 33 cents to $57.70 a barrel on the London-based ICE Futures Europe exchange. Prices lost 0.7 percent to $57.37 on Monday. The global benchmark traded at a premium of $5.44 to WTI.
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.