Near-term bias for crude oil remains positive

Brent weekly chart

Brent weekly chart

Since the start of the year, OPEC and Russian Federation, the world's No. 1 crude producer, have had a target to cut 1.8 million barrels per day (bpd) through March 2018 in joint output.

Oman oil price November delivery jumped 82 cents to reach $56.76 per barrel compared to $55.94 per barrel in the previous trading session on the Dubai Mercantile Exchange (DME).

The oil market has been in a downturn for nearly three years.

Brent for November settlement was little changed at $57.92 a barrel on the London-based ICE Futures Europe exchange, after losing 54c on Wednesday.

In the past three months, the price of Brent crude oil-the global benchmark-has steadily climbed by almost 30%, reaching nearly $60 a barrel this week. The Energy Information Administration reported U.S. crude inventories last week fell for the first time since Hurricane Harvey slammed Texas as refiners boosted processing rates and exporters shipped out one of every six barrels of crude pumped from domestic wells.

The two benchmarks posted declines Tuesday, yet losses were limited due to OPEC's continued output restrictions and lingering concerns that Turkey may disrupt Kurdish oil shipments.

Dubai and Oman crude oil barrels were also traded at $52.91 and $53.23 in the week leading to September 15 after respectively snowballing by 84 and 85 cents.

US West Texas Intermediate was trading at $50.91 per barrel, an increase of 29 cents from Friday's trading price of $50.62 a barrel.

Gasoline futures fell 2.22 cents, or 1.34%, to $1.6318 a gallon.

OPEC and other major oil producers such as Russian Federation and Azerbaijan reached an agreement in December 2016 to remove 1.8 million barrels a day from the market.

For the bullish trader, taking out the WTI high at $52.43 and the Brent high at $58.87 will signal a resumption of the uptrend.

As for USA shale, producers hedging to take advantage of recent higher prices could set the stage for a price fall next year, chief economist at Gunvor David Fyfe said.

She said this has put Brent crude prices within sight of the US$60 per bbl mark and thus reinforcing the research house "overweight" view on the sector. The Opec producer is shipping a combined 2.6 million barrels a day of crude and the ultra-light oil known as condensate, and expects to export more at 2017-end.

In 2018, non-OPEC supply from US shale will increase, and the current deadline for OPEC's cuts-March 2018-also points to higher OPEC supply when the production pact ends, if it ends at the end of Q1 2018.

Essam al-Marzouq, Kuwait's oil minister and chair of the meeting of the Join Ministerial Monitoring Committee, said output curbs had helped cut global crude inventories to their five-year average, according to Reuters, which was Opec's stated target.

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