Oil steady as U.S. output peak counters Middle East concerns

By Grant Smith on 11/9/2017

(Bloomberg) -- Oil steadied near $57/bbl in New York as data showing U.S. crude output at the highest in at least three decades countered concerns sparked by a political purge in top exporter Saudi Arabia.

U.S. output expanded for a third week to 9.62 MMbopd, the highest in weekly Energy Information Administration data going back to 1983. Crude inventories rose 2.24 MMbbl last week, compared with a 2.45 MMbbl drop forecast in a Bloomberg survey.

Oil has advanced about 20% since the start of September on signs the Organization of Petroleum Exporting Countries and its allies will extend output cuts past March. The arrest of more than 10 princes as well as dozens of officials and businessmen in an anti-corruption probe in Saudi Arabia, OPEC’s de-facto leader, has added to price gains.

“Geopolitics cannot undo the post-supercycle oil order,” said Norbert Ruecker, head of commodity research at Julius Baer Group Ltd. in Zurich.

West Texas Intermediate for December delivery was at $56.82/bbl on the New York Mercantile Exchange, up 1 cent, at 8:06 a.m. in London. Total volume traded was about 26% below the 100-day average. Prices settled 39 cents lower at $56.81 on Wednesday, after soaring 1.3% as multiple platforms  suspended operations in the Gulf of Mexico.

Brent for January settlement slipped 12 cents to $63.37/bbl on the London-based ICE Futures Europe exchange, after falling in the past two sessions. The global benchmark crude was at a premium of $6.31 to January WTI.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, rose by 720,000 bbl to 64.6 MMbbl, the EIA said Wednesday. Gasoline supplies fell a third week to 209.5 MMbbl.

Oil-market news. ConocoPhillips expects its capital spending to average about $5.5 billion a year in the next three years, it said Wednesday. That would be $1 billion more than what the company has forecast for its budget this year.

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