Yemisi Izuora
Oil markets rose in early Asian trade on Tuesday, buoyed by expectations of a drop in U.S. crude stockpiles and after last week’s deal between OPEC and other crude producers to extend output curbs.
International benchmark Brent crude futures were up 11 cents from their last close, or 0.18 percent, at $62.56 per barrel.
U.S. West Texas Intermediate (WTI) crude futures were up 15 cents, or 0.26 percent, at $57.62 per barrel.
The Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers last week rolled over their agreement to cut output by 1.8 million barrels per day (bpd) until the end of 2018, looking to erode a global glut and drive up prices.
Goldman Sachs said Saudi Arabia and Russia showed a stronger commitment to extending cuts and raised its Brent and WTI spot forecasts for 2018 to $62 and $57.5 per barrel respectively.
“By 2019, however, we believe the response of shale and other producers to higher prices will incentivize OPEC and Russia to pare back their now greater spare capacity, leaving risks to prices skewed to the downside,” the bank added.
In November, OPEC crude oil output fell by 300,000 bpd to its lowest since May, according to a Reuters survey released on Monday.
While rising U.S. oil production remains a hurdle for OPEC’s efforts to rebalance the market, U.S. crude inventories likely fell last week, marking their third straight weekly drop, a preliminary Reuters poll showed.
Seven analysts polled ahead of inventory reports from the industry group American Petroleum Institute (API) and the U.S. Department of Energy’s Energy Information Administration (EIA) estimated, on average, that crude stocks were seen falling 3.5 million barrels in the week ended December 1.
Meanwhile OPEC is expected to stick to its current policy of output cuts in the second half of 2018, but oil producers have plenty of supply with which to respond to any sudden disruptions, Saudi Arabian energy minister Khalid al-Falih said.
He was speaking after meeting with U.S. Energy Secretary Rick Perry, who said OPEC would make its own decisions and that he was comfortable the United States could work within those parameters.