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  • Oil extends gains to sixth day on dip in U.S. output
  • * Oil to continue trading near $45/barrel –
    Goldman Sachs (Updates with settlement prices,
    adds quote)
    NEW YORK – Oil futures ended slightly higher
    on Thursday, extending crude’s rally to a sixth
    straight session after a decline in weekly U.S.
    crude production temporarily eased concerns
    about deepening oversupply.
    U.S. crude futures settled up 19 cents at $44.93
    a barrel after hitting a two-week high of $45.45
    in late-morning trading. The market retreated
    from highs after Societe Generale became the
    third investment bank to cut its outlook for oil
    prices in the last week.
    Crude prices hit a 10-month low last week but
    have rebounded more than 5 percent, stretching
    their bull run to the longest since April. Brent
    crude futures ended up 11 cents at $47.42 a
    barrel, after touching a two-week high of $48.03
    earlier in the session.
    “After the steep drop in oil prices of recent
    weeks, I believe that especially hedge funds saw
    nice buying momentum and lower U.S. crude
    production was the trigger to act,” said Hans
    van Cleef, senior energy economist at ABN
    Amro.
    Analysts were not sure whether bearish
    sentiment had abated in the oil market, given
    larger-than-usual inventories in the United
    States for both crude oil and key products like
    gasoline.
    “It does feel as if a wave of selling has ebbed
    for now,” wrote analysts at Credit Suisse. They
    added, however, that the rebound in prices
    reflected technical buying rather than a change
    in fundamentals.
    In recent weeks, funds have been unloading long
    speculative positions, reducing bets on higher
    prices while brokerages including Goldman
    Sachs and Societe Generale have cut their 2017
    forecasts for crude prices.
    SocGen on Thursday estimated U.S. crude
    futures would average $47.50 a barrel in the
    third quarter, down from previous expectations
    for $55.
    U.S. crude production dropped 100,000 barrels
    per day (bpd) to 9.3 million bpd last week, the
    steepest weekly fall since July 2016. But
    analysts said the decline was related to
    temporary factors, including production shut as
    a precaution in the Gulf of Mexico due to
    Tropical Storm Cindy, along with maintenance in
    Alaska.
    Global oil supplies remain ample despite output
    cuts of 1.8 million bpd by the Organization of
    the Petroleum Exporting Countries and other
    producers since January.
    OPEC and its allies, trying to reduce a crude
    glut, agreed in May to extend the supply cut
    through March 2018. OPEC has exempted
    Nigeria and Libya from the curbs, leaving them
    free to ramp up output that had been sapped by
    local unrest.
    “That’s going to increase pressure on OPEC
    cuts,” said Tony Scott, managing director of
    analytics at BTU Analytics in Denver. “As long
    as Libya and Nigeria can remain stable – Libya
    has ramped up several times over last couple of
    years and then the violence has come back.”
    Libyan oil production is nearing 1 million bpd, a
    Libyan source with direct knowledge of the
    matter told Reuters.
    Royal Dutch Shell on Wednesday lifted force
    majeure on Nigerian Bonny Light crude exports
    after pipeline repairs. (Additional reporting by
    Karolin Schaps in London and Naveen Thukral in
    Singapore; Editing by Edmund Blair and Richard
    Chang)

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