London — Oil bounced back from a one-week low on Thursday
as the International Energy Agency (IEA) said global oil markets were
tightening even before cuts promised by oil cartel Opec and other
producers could take shape.
Oil prices have gyrated this year as the market’s focus has swung from the hope that oversupply may be curbed by output cuts announced by Opec and others producers to the fear that a rebound in US shale production could swamp any such reductions.
Brent crude, the international benchmark for oil prices, was up 27c at $54.19 a barrel by 10.15am GMT after closing down 2.8% in the previous session.
US West Texas Intermediate crude oil was up 25c at $51.33 a barrel, having dropped to a one-week low on Wednesday at $50.91 a barrel.
The IEA said that while it was "far too soon" to gauge Opec members’ levels of compliance with promised cuts, commercial oil inventories in the developed world fell for a fourth consecutive month in November, with another decline projected for December.
It raised its 2016 demand growth estimate, and said the data indicated that rising demand was slowly tightening global oil markets.
Still, analysts warned that keeping to the cuts was crucial, particularly as a resilient US shale industry threatened to add more barrels to the market.
"Discipline and strict adherence to the new quotas will be needed probably throughout 2017 and beyond to see the long-awaited and sustainable rebalancing finally arrive," PVM Oil Associates analyst Tamas Varga said in a note.
Opec itself said its cuts would help balance the market, and its output had already fallen in December. But it also pointed to the possibility of a rebound in US output amid higher oil prices.
Stocks data coming out of the US sent more mixed signals. American Petroleum Institute (API) data on Wednesday showed that US crude stocks fell by 5.04-million barrels in the week to January 13, well above the expectations of a 342,000-barrel decline.
But the data also showed larger than expected, and potentially bearish, increases in stocks of petrol and distillates.
Weekly inventory data are due from the US Energy Information Administration (EIA) at 4pm GMT. It has been delayed by a day due to a US public holiday on Monday.
Reuters /BDBlive
Oil prices have gyrated this year as the market’s focus has swung from the hope that oversupply may be curbed by output cuts announced by Opec and others producers to the fear that a rebound in US shale production could swamp any such reductions.
Brent crude, the international benchmark for oil prices, was up 27c at $54.19 a barrel by 10.15am GMT after closing down 2.8% in the previous session.
US West Texas Intermediate crude oil was up 25c at $51.33 a barrel, having dropped to a one-week low on Wednesday at $50.91 a barrel.
The IEA said that while it was "far too soon" to gauge Opec members’ levels of compliance with promised cuts, commercial oil inventories in the developed world fell for a fourth consecutive month in November, with another decline projected for December.
It raised its 2016 demand growth estimate, and said the data indicated that rising demand was slowly tightening global oil markets.
Still, analysts warned that keeping to the cuts was crucial, particularly as a resilient US shale industry threatened to add more barrels to the market.
"Discipline and strict adherence to the new quotas will be needed probably throughout 2017 and beyond to see the long-awaited and sustainable rebalancing finally arrive," PVM Oil Associates analyst Tamas Varga said in a note.
Opec itself said its cuts would help balance the market, and its output had already fallen in December. But it also pointed to the possibility of a rebound in US output amid higher oil prices.
Stocks data coming out of the US sent more mixed signals. American Petroleum Institute (API) data on Wednesday showed that US crude stocks fell by 5.04-million barrels in the week to January 13, well above the expectations of a 342,000-barrel decline.
But the data also showed larger than expected, and potentially bearish, increases in stocks of petrol and distillates.
Weekly inventory data are due from the US Energy Information Administration (EIA) at 4pm GMT. It has been delayed by a day due to a US public holiday on Monday.
Reuters /BDBlive
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