Oil rallies amid optimism that market is rebalancing; WTI back over $50
LONDON, August 10, 2017 – Oil prices continued higher on Thursday, rising to the strongest level in almost three months amid growing optimism that the market was starting to rebalance.
The U.S. West Texas Intermediate crude September contract was at $50.16 a barrel by 8:50AM ET (1250GMT), up 60 cents, or around 1.2%. It rose to an intraday peak of $50.22, the most since August 1, when prices touched a three-month high of $50.43.
Elsewhere, Brent oil for October delivery on the ICE Futures Exchange in London tacked on 83 cents, or about 1.6%, to $53.53 a barrel. It touched its highest since May 25 at $53.63 earlier in the session.
Sentiment was boosted after the Organization of the Petroleum Exporting Countries forecast higher demand for its oil in 2018 due to rising global consumption and slower supply growth from rivals.
In its monthly report released earlier, OPEC said the world would need 32.42 million barrels per day (bpd) of its crude next year, up 220,000 bpd from the previous forecast.
The group was also upbeat about 2018 economic growth and said oil stocks in developed economies declined in June and would fall further in the U.S., a sign the OPEC-led supply cut is working.
According to the report, the cartel’s oil output rose by 173,000 bpd in July to 32.87 million bpd, led by gains in Libya and Nigeria, two members exempt from the cuts aimed at eliminating excess supply.
The figures mean OPEC has complied 86% with its output-cutting pledge, down from 96% initially reported for June but still high by OPEC standards.
OPEC and 10 producers outside the cartel, including Russia, agreed since the start of the year to slash 1.8 million barrels per day in supply until March 2018 in order to reduce a global supply glut and rebalance the market.
Oil futures finished higher on Wednesday after U.S. government data showed a sixth consecutive week of declines in U.S. crude inventories.
U.S. oil inventories fell by 6.5 million barrels at the end of last week to 474.4 million barrels, much more than the expected drop of around 2.7 million barrels.
Elsewhere on Nymex, gasoline futures for September was up 2.4 cents, or 1.5%, to $1.648 a gallon, while September heating oil ticked up 2.4 cents to $1.677 a gallon.
Natural gas futures for September delivery advanced 3.4 cents, or nearly 1.2%, to $2.917 per million British thermal units as traders looked ahead to weekly storage data due later in the global day.