OIL PRICES: ABOVE $50
REUTERS, BLOOMBERG, OILPRICE - Oil prices firmed on Wednesday, holding near eight-week highs, as a fall in U.S. inventories bolstered expectations that the long-oversupplied market was moving toward balance.
Brent crude futures LCOc1 rose 30 cents to $50.50 a barrel by 0959 GMT, after rallying more than 3 percent on Tuesday.
U.S. West Texas Intermediate futures CLc1 climbed 40 cents to $48.29 a barrel.
U.S. crude stockpiles fell sharply last week as refineries boosted output, while gasoline inventories increased and distillate stocks decreased, data from industry group the American Petroleum Institute showed on Tuesday.
Crude inventories fell 10.2 million barrels in the week ending July 21 to 487 million, more than the expected decrease of 2.6 million barrels. Data from the U.S. Energy Information Administration on Wednesday could provide more support, with forecasts of a drop for a fourth week in a row.
Tuesday's stock draw added to hopes the long-awaited oil market rebalancing was underway. Saudi Arabia said on Monday it would limit oil exports to 6.6 million barrels per day (bpd) in August, down nearly 1 million bpd from a year earlier.
"The market has been tightening and the refinery margins are strong," said PetroMatrix managing director Olivier Jakob, saying the U.S. stock draw offered a boost to prices. "You add geopolitical risk premium for Venezuela, and you've got a strong market."
Venezuela, an OPEC member producing about 2 million bpd of oil, faces deepening economic woes and protests.
President Nicolas Maduro's adversaries plan strikes to push him to abandon a weekend election. The United States is considering financial sanctions to halt dollar payments for the country's oil.
Nigerian output slipped this week as leaks forced Shell to shut a pipeline exporting some 180,000 bpd of oil. Nigeria, which has been exempted from OPEC-led production curbs, also agreed to cap or cut output when it stabilized at 1.8 million bpd.
But analysts said the current oil price rally could encourage more production, particularly from the United States.
"Relieved bulls should be careful what they wish for. Any price rebound will only embolden U.S. shale producers at a time when rumors have started to emerge that the U.S. shale boom is slowing," PVM oil analyst Stephen Brennock said in a note.
Anadarko Petroleum Corp (APC.N) said on Monday it would cut its 2017 capital budget by $300 million because of depressed oil prices, the first major U.S. oil producer to do so, after posting a larger-than-expected quarterly loss.
Brent September crude futures fell 18 cents on the day to $47.88 a barrel by 0850 GMT. The price fell 2.5 percent on Friday after a consultancy forecast a rise in OPEC production for July. NYMEX crude for September delivery fell 20 cents to $45.57 a barrel.
With prices still languishing below the $55-$60/b that some ministers have said they are targeting, some market watchers say OPEC and its non-OPEC partners have no choice but to deepen cuts to make up for output gains from exempt Nigeria and Libya, as well as sliding compliance from other members.
Non-oil growth is projected to pick up to 1.7 percent in 2017, but overall real GDP growth is expected to be close to zero as oil GDP declines in line with Saudi Arabia’s commitments under the OPEC+ agreement.
International benchmark Brent crude futures were at $49.28 per barrel 0501 GMT, down 2 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $46.89 per barrel, down 3 cents.
Fitch Ratings anticipates most investment-grade and 'BB' category U.S. E&P companies will see minimal ratings changes in a steady $45 per barrel environment as the realization of further production efficiency gains and lower costs per barrel of oil equivalent (boe) should contribute to resilient margins and cash flow.
EIA forecasts that total U.S. crude oil production will average 9.3 million barrels per day (b/d) in 2017, up 0.5 million b/d from 2016. In 2018, crude oil production is expected to reach an average of 9.9 million b/d, which would surpass the previous record of 9.6 million b/d set in 1970.
Brent crude futures LCOc1, the international benchmark, were up 11 cents at $48.95 per barrel at 0925 GMT. U.S. West Texas Intermediate crude futures CLc1 were at $46.50 per barrel, up 10 cents.
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