Oil prices continued to climb Wednesday, boosted by a growing market consensus that the Organization of the Petroleum Exporting Countries will extend its deal to cut crude output.
Brent, the global benchmark, was up 1.18%, at $61.66 a barrel on London's Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.31%, at $55.09 a barrel--a year-to-date high.
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"The market seems to be really optimistic about OPEC continuing with production curbs" through the end of 2018, said Nitesh Shah, commodity strategist at ETF Securities.
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.
Saudi Arabia and Russia--the world's largest crude producers--have both indicated a willingness to extend the deal when it expires in March. OPEC is set to debate the issue at an official meeting in Vienna on Nov. 30.
ETF's Mr. Shah said oil investors were also increasingly convinced that a "mopping up of excess inventories is taking place and is successful."
On Tuesday, prices were helped by a report from the U.S. Energy Information Administration showing U.S. crude output had edged down in August, falling to 9.203 million barrels a day from 9.234 million barrels a day in July.
Data released the same day from the American Petroleum Institute showed a 5.1 million barrel drawdown in crude supplies for the week ended Oct. 27.
Analysts and traders expect official U.S. government data on inventory levels due Wednesday afternoon to show a 1.2 million barrel drawdown in crude stockpiles last week, according to a survey conducted by The Wall Street Journal.
"Often seen as the bad boy of the oil world, the U.S. is now making amends by flying the flag for the rebalancing process," Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd., said in a note Wednesday.
Still, market observers have widely cautioned that rising prices could incentivize U.S. shale oil producers to further increase production, potentially offsetting the market rebalancing.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was up 1.13%, at $1.73 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $558.50 a metric ton, up 1.36% from the previous settlement.
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(END) Dow Jones Newswires
November 01, 2017 07:14 ET (11:14 GMT)