Oil Prices Stuck in 'Limbo'

By Christopher Alessi Features Dow Jones Newswires

Oil prices were mainly flat Thursday morning, as the market held steady in a newfound, higher range for crude.

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Brent crude, the global benchmark, was down 0.3% at $58.27 a barrel on London's Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.4% at $52.16 a barrel.

Prices "seem to be in limbo a little bit," said Thomas Pugh, a commodities economist at Capital Economics.

Mr. Pugh said Brent was "bubbling around $58 a barrel" and seemed to have found a new floor of around $55 a barrel over the past month--partly on the back of geopolitical risk--compared with a lower range of $45 to $55 a barrel earlier in the year.

"Everyone is looking forward to the OPEC meeting at the end of next month," he said.

The Organization of the Petroleum Exporting Countries is expected to debate extending its production cutting agreement through 2018 at its next official meeting in Vienna on Nov. 30.

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OPEC and some major producers outside the cartel, including Russia, first agreed late last year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of alleviating global oversupply and boosting prices. The deal was extended in May through March 2018.

The production cuts have helped drain inventories in the U.S. and elsewhere in the developed world, but crude prices have still remained stuck below the Saudi target of $60 a barrel.

Saudi Arabia and Russia--the world's two largest crude producers--want to extend the deal through the end of next year, people familiar with the matter said Wednesday.

Crude prices had pulled back Wednesday following the release of U.S. inventory data, showing a 856,000-barrel rise in crude stockpiles in the week ended Oct. 20. Analysts and traders surveyed by The Wall Street Journal had been expecting crude inventories to have decreased by 2.2 million barrels, on average.

However, gasoline and diesel supplies fell by 5.5 million barrels and 5.2 million barrels, respectively, according to the Energy Information Administration.

The EIA data also showed U.S. oil production had returned to pre-hurricane levels, climbing to more than 9.5 million barrels a day.

Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was up 0.76%, at 1.69 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $532.00 a metric ton, down 0.28% from the previous settlement.

Summer Said contributed to this article.

Write to Christopher Alessi at christopher.alessi@wsj.com

Oil prices closed at a six-month high on Thursday, boosted by declining stockpiles of fuel and hopes that OPEC will extend a deal to limit global production.

Light, sweet crude for December delivery rose 46 cents, or 0.9%, to $52.64 a barrel on the New York Mercantile Exchange, the highest settle value since April 17. Brent, the global benchmark, rose to a two-year high, closing up 86 cents, or 1.5%, to $59.30 a barrel.

Prices have risen 11 out of the past 14 sessions, as a steady decline in inventories has boosted investor optimism that global supply and demand are starting to even out.

Adding to bullish sentiment, Saudi Arabia and Russia -- the world's two largest crude producers -- want to extend a deal to cut production through the end of next year, people familiar with the matter said Wednesday.

The Organization of the Petroleum Exporting Countries, along with several other nations outside the cartel, agreed to curb oil production by about 1.8 million barrels a day last year.

The deal has been extended once through March 2018, but some market participants are now expecting that the group will push the agreement out further as it attempts to bring storage levels back to the five-year average.

"Everyone is looking forward to the OPEC meeting at the end of next month," said Thomas Pugh, a commodities economist at Capital Economics. OPEC's next official meeting is on Nov. 30 in Vienna.

On Wednesday, the U.S. Energy Information Administration also reported that while crude stockpiles unexpectedly increased, gasoline and diesel supplies fell by 5.5 million barrels and 5.2 million barrels, respectively, in the week ended Oct. 20.

"That suggests that the demand picture here in the U.S. is pretty good," said Gene McGillian, research manager at Tradition Energy. "The idea that demand is strong is still underpinning the market's upward move."

Meanwhile, gasoline futures rose 0.9% to $1.7506 a gallon and diesel futures gained 1.3% to $1.8419 a gallon.

Write to Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

October 26, 2017 16:47 ET (20:47 GMT)