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Oil Futures Flat at Two-Year High on New EIA Data, OPEC Optimism

November 1, 2017 at 16:38 by Andrew Moran

Oil prices are mixed midweek as investors comb through new US government data and cheer on Organization of the Petroleum Exporting Countries (OPEC)’s efforts to rebalance the oil market.

December West Texas Intermediate (WTI) futures slipped $0.02, or 0.04%, to $54.38 per barrel at 16:25 GMT on Wednesday on the New York Mercantile Exchange. Despite paring most of its early gains, US crude prices are trading at their best levels since July 2015.

Brent, the international benchmark for oil prices, is also in red territory. January Brent futures tumbled $0.06, or 0.10%, to $60.88 a barrel on London’s ICE Futures exchange. Brent is also hovering around a two-year high.

Year-to-date, US crude prices have dipped 4%, while Brent futures have advanced just under 4%.

According to the US Energy Information Administration (EIA), domestic crude supplies decreased by 2.4 million barrels for the week ending October 27. US crude output climbed 46,000 barrels per day (bpd) to 9.55 million barrels. Gasoline stockpiles fell by four million barrels, while distillate stockpiles slipped 300,000 barrels.

Ahead of its November 30 meeting in Vienna, OPEC and other oil-producing nations are showing signs that they will agree to extend the production deal to help slash international oil supplies. OPEC is expected to agree to extend its output freeze by an additional nine months until the end of 2018.

The arrangement may be imperative because the US shale oil revolution persists, despite the tumultuous weather events that transpired in September. If OPEC dismisses the pact and nations expand output, then a supply glut could very well return.

Analysts say that OPEC officials are likely pleased by oil prices stabilizing at the crucial $50 threshold. Moreover, investors are anticipating the oil market to be undersupplied heading into 2018, a trend that will certainly boost crude prices in the new year.

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