Oil Halts Gains Near $51 on Signs US Crude Stockpiles Expanded

Harvey, production expectations impact crude futures curve

Harvey, production expectations impact crude futures curve

The International Energy Agency estimated in its monthly report on Thursday that the decline in inventories this year will halt in 2018 due to rising supplies from the USA and elsewhere.

Strong Chinese oil import data also supported crude prices, traders said. Although EIA expects the hurricane-related increase in the spread to subside, the agency forecasts the Brent-WTI spot price spread to average $3.50/Bbl in 2018, which is higher than the first half of 2017 average of $1.69/Bbl.

Oil prices edged up on Wednesday, rising for a third day on signs that markets are gradually tightening after years of oversupply, although the outlook for 2018 remained less certain.

The forecasts assume that Libya and Nigeria's production will remain at current levels and USA shale output will expand by no more than 500,000 barrels a day next year, two of the people said.

Oil has strengthened in recent weeks due to a sharp drawdown in distillates feeding expectations for renewed demand, but it is unclear whether US crude prices will regain the high of almost $53 a barrel reached in late September.

Brent for December settlement declined 29 cents to $56.65 a barrel on the London-based ICE Futures Europe exchange.

September's imports were slightly over 9-million barrels a day, solidifying China as the world's biggest importer. Distillate stocks fell by 1.5 million barrels, short of expectations for a drop of 2.2 million barrels. Last month, it expected a 590,000 bpd year-over-year increase to 9.84 million bpd. Still, even if the producers decide to continue with the cuts next year, surging supplies from the USA and elsewhere will prevent inventories dropping further. USA exports fell in the most recent week to 1.27 million bpd, but US exports have still exceeded 1 million barrels a day for three straight weeks, the first time this has happened.

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