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Oil edges up on supply cut talk

Oil edges up on supply cut talk

That was largely tied to solid gains in crude oil, sparked by signs of reduced global production.

Crude oil prices rose on Wednesday after the International Energy Agency (IEA) said a global surplus of crude was starting to shrink, even though USA data showed another big increase in domestic inventories due to Hurricane Harvey. Crude inventories rose by 6.2 million barrels in the week to September 8 to 468.8 million, compared with analysts' expectations for an increase of 3.2 million barrels.The U.S. Department of Energy's Energy Information Administration (EIA) reports on stockpiles and refinery runs later on Wednesday.

Libya's production fell by about 112,000 bpd to a total of 890,000 bpd last month, however.

US crude traded up 70 cents a barrel or 1.47 percent, by 11:13 a.m. EDT (1514 GMT).

Crude oil prices fell in Asia on Tuesday with industry estimates of US inventories expected to show a leap as stocks build from Gulf Coast refinery shutdowns in the wake of Hurricane Harvey.

Distillate stockpiles, which include diesel and heating oil, fell 3.2 million barrels, versus expectations for a 1.5 million-barrel drop, the EIA data showed.

The West Texas Intermediate for October delivery ticked up 0.16 US dollar to settle at 48.23 dollars a barrel on the New York Mercantile Exchange, while Brent crude for November delivery rose 0.43 dollar to close at 54.27 dollars a barrel on the London ICE Futures Exchange.

Analysts said the report also indicated OPEC's production-cutting deal with non-OPEC is helping to curb a supply glut.

OPEC and non-member producers are seeking to extend their output cut agreement.

Likewise, with temporary fuel shortage issues after Harvey, gasoline storage levels fell by 8.4 million barrels as companies drew from their fuel inventories to help meet demand.

Even so, US crude stockpiles are likely to build in the next few weeks as refiners try to catch up with the backlog of oil stranded during the storms of the past two weeks, analysts said. It said the United States should strengthen its energy security to address hurricanes, by steps such as adding oil products to government-held inventories.

Despite evidence that the Organization of the Petroleum Exporting Countries (OPEC) output reduction initiative has been ineffective, supporters have credited it for bringing global supply and demand closer to rebalance at worst and achieving full rebalance at best - but one such supporter, Saudi Arabia, is open to contrary viewpoints: on Monday it stated its willingness to participate in an extension of the cutbacks beyond next March.

USA gasoline stocks slumped 8.4 million barrels, the largest one-week decline since the EIA started recording the data in 1990, while distillate stocks fell 3.2 million barrels.

On Friday, WTI lost 3.3%, causing its discount to Brent to blow out to beyond $6 a barrel, the highest for 2017. OPEC sees higher demand for its oil in 2018 as the global market tightens.

"There will be some demand lost - obviously Florida is a big gasoline demand center", Amrita Sen, chief oil analyst at consultants Energy Aspects, said in a television interview.


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