Oil Steadies After Fall in U.S. Inventory

By Sarah McFarlane and Alison Sider Features Dow Jones Newswires

Oil prices wavered between slight gains and losses on Thursday after the market reached multi-month highs earlier in the week, prompting some investors to take profits.

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U.S. crude futures recently traded down 2 cents, or 0.04%, at $54.28 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 10 cents, or 0.17%, to $60.39 a barrel on ICE Futures Europe.

Analysts said oil remained underpinned by falling U.S. stocks, which is helping to drain the buildup of global inventory, accumulated over several years of surplus supply. The U.S. Energy Information Administration published data on Wednesday showing crude stockpiles fell by 2.4 million barrels in the week ended Oct. 27.

Prices edged lower Wednesday after the figures were released, since the draw didn't quite live up to a larger drawdown predicted the day before by the American Petroleum Institute, an industry group. Prices continued to trade around unchanged Thursday.

"The market is taking a breath here," said Andy Lipow, president of Lipow Oil Associates. Mr. Lipow said he is sticking with his calls for Brent to hit $60 and for West Texas Intermediate, the U.S. Benchmark, to reach $55 a barrel for the time being.

"I'm going to wait a little bit and look around and see what's going to happen with inventories and demand over the next several weeks," he said.

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Brent prices broke above $60 a barrel last week for the first time since July 2015, supported by expectations that an agreement to cut output between the Organization of the Petroleum Exporting Countries and other major producers including Russia would be extended beyond its current time frame of March 2018.

Rising U.S. output could hinder these efforts to rebalance supply and demand however, while also eating into OPEC members' market share. U.S. exports hit a record level of more than 2 million barrels a day in the week ended Oct. 27, according to EIA data.

"As OPEC considers a full extension of its production cut deal, U.S. crude will likely make inroads into traditional OPEC markets that will be difficult to reverse," Emirates NBD Bank said in a note.

"As OPEC considers a full extension of its production cut deal, U.S. crude will likely make inroads into traditional OPEC markets that will be difficult to reverse," Emirates NBD Bank said in a note.

But other analysts say global demand is strong enough to absorb the extra output from the U.S.

"In our view, the market should not be concerned about elevated U.S. exports," analysts at Energy Aspects wrote in a research note. "Brent at $60 is undoubtedly justified."

Gasoline futures rose 1.75 cents, or 1.01%, to $1.7585 a gallon. Diesel futures fell 1.23 cents, or 0.66%, to $1.8502 a gallon.

Write to Sarah McFarlane at sarah.mcfarlane@wsj.com and Alison Sider at alison.sider@wsj.com

(END) Dow Jones Newswires

November 02, 2017 11:15 ET (15:15 GMT)