Oil steady on OPEC-led supply cuts, tight U.S. market

Oil prices steadied on Thursday as supply cuts by OPEC and other major exporters tightened the market despite higher production in the United States.

Benchmark Brent crude LCOc1 was unchanged at $60.49 a barrel by 1005 GMT. On Wednesday, Brent reached $61.70, its highest intraday level since July 2015. The contract is up more than a third since its 2017-lows in June

.

U.S. light crude CLc1 was 10 cents higher at $54.40, almost 30 percent above its 2017-low in June.

Confidence has been fueled by an effort this year lead by the Organization of the Petroleum Exporting Countries and Russia to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets. 

Saudi Arabian Energy Minister Khalid al-Falih said on Thursday supply and demand balances were tightening and oil inventories falling, while compliance with the OPEC-led pact to curb supplies had been “excellent”.

Russian oil output edged up to 10.93 million bpd in October from 10.91 million bpd in September, official data showed on Thursday, but the country remains in compliance with the deal to curb output. 

Overall, oil markets have been slightly undersupplied this year, resulting in inventory drawdowns.

The pact to withhold supplies runs to March 2018, but there is growing consensus to extend the deal to cover all of next year. 

Oil was also supported by falling U.S. commercial crude inventories despite rising output. 

Goldman Sachs said it expected year-on-year U.S. oil production growth of 0.8 million to 0.9 million bpd at year-end 2017. That would put end-2017 output at 9.6-9.7 million bpd, only slightly above current levels. 

The EIA said a record 2.1 million bpd of U.S. crude was exported in the latest week.
Traders said this was due to U.S. crude trading at a wide discount to Brent, making exports attractive. CL-LCO1=R