Oil prices stable on healthy demand, but oversupply looms later in 2018

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"Nevertheless, even with crude prices at the higher end of the new $45 (RM175) - $65 (RM 253) range in early 2018, we expect prices to stay within this range over the medium term amid better balance between increased production and growth in demand", he said in a statement yesterday.

"We are now only two to four weeks away from when weekly oil inventory data will start to draw again which should be supportive for oil prices", SEB commodities strategist Bjarne Schieldrop said. Opec said on Wednesday that oil consumption was expected to grow by 1.62-million barrels a day in 2018. Total American output has passed 10 million barrels a day, beating a record set in 1970.

Both Iran and Venezuela are party to OPEC's production cut deal, under which the organization and 10 non-OPEC allies led by Russian Federation agreed to reduce supplies by about 1.8 million b/d to help rebalance the market and prop up prices. Oil inventories happened to climb in January for the first time since July 2017, but only increased by 18 million barrels, or about half of the usual rate for that time of year. If Trump walks away from the Iran nuclear deal on May 12 (the date of the next USA sanctions waiver), crude oil prices are likely to rise as global supply falls. USA shale is still expected to post "explosive" growth in 2018, but shale drillers might not swamp the market as some have feared.

Official weekly USA crude production and inventory figures will be published by the Energy Information Administration (EIA) later on Wednesday.

Output from major USA shale regions is expected to continue strong gains.

It's not clear how this will inform OPEC's decision-making; US shale is still surging, keeping a lid on oil prices, regardless of the metric OPEC wants to use. Hamm has called EIA projections "just flat wrong" and warned that such high projections are distorting global oil prices.

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Oil held gains near $61 a barrel on signs of robust fuel consumption in the U.S. and as OPEC's compliance with its pledged output cuts soared to a new record. But after that, as the historic shale expansion slows to more pedestrian levels, "the market might well need the supplies now being held off the market by leading producers", the IEA said. Distillate inventories fell by 4.36 million barrels to the lowest level since December.

Prices also received some support from Rex Tillerson's ouster as U.S. secretary of state.

Oil has struggled to recover losses from last month's broader market slump after topping US$66 (RM257) a barrel in January.

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"Risks are greater to the downside", Sheldon said, adding that with new sanctions in place Venezuela would be forced to ship to Asia and other more distant markets at potentially steep discounts. One Group Disagrees Interestingly, some US oil producers dispute these rosy growth scenarios.

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