The oil price retained its upward momentum Wednesday. It was supported by a variety of developments, including the latest API data, reporting a huge draw on US crude inventories.
In addition, comments at the side lines of the Oil and Money conference in London likely added support for that move, too.
The price of Brent Crude oil is above $58 per barrel, while Western Texas Intermediate (WTI) crude oil was above the $52 per barrel level.
Output cap deal seen continuing
According to a Reuters report, Total’s Chief Executive, Patrick Pouyanne, said it’s likely the current oil output cap agreement between the Organisation of Petroleum Exporting Countries (OPEC) and Russia, will continue beyond March 2018.
“Saudi Arabia and Russia have really embarked on this strategy to support the market,” Pouyanne told reporters. He added, “I will not be surprised to see the extension.”
OPEC agreed the landmark output cap with Russia earlier in 2017, to help strike a balance between supply and demand. The price of oil sank below $28 per barrel in 2016, as an oil glut in recent years pushed the value lower.
That imbalance is much more under control now, thanks in a large part to the output cap agreement that is currently set to end in March 2018. However, there has been much talk over extending the cap and including other non-OPEC members, in future output decisions and agreements.
US oil inventory drawdown bigger than expected
Those comments from Total’s Pouyanne, came hot on the heels of data from the American Petroleum Institute showing 7.130 million barrels had been drawn from US crude oil inventories. The data covered activity in the week ended October 13.
According to a survey from S&P Platts, the drawdown figure had been expected to be 3.9 million barrels.
Meanwhile, military action between Iraq and Kurdish forces continues to add support to the oil price. A number of oil installations surround the city of Kirkuk which has become a key battle ground.
Although Iraqi spokespeople have said there is an agreement in place to ensure no disruption hits those oil producing sites, unease over the continued fighting is helping keep the oil price a little higher.