Oil Holds Near 3-Week Highs Amid Optimism That Market Is Rebalancing

Investing.com - Crude oil prices held near their strongest level in around three weeks on Thursday, supported by growing indications that the market was starting to rebalance.

U.S. West Texas Intermediate (WTI) crude futures slipped 15 cents, or around 0.3%, to $51.89 a barrel by 3:35AM ET (0735GMT), staying within sight of a three-week high of $52.37 reached at the start of the week.

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., shed 18 cents, or nearly 0.3%, to $57.97 a barrel. It rose to its best level since Sept. 28 at $58.54 in the last session.

Oil prices ended higher for the fourth straight session on Wednesday, as investors digested weekly supply data from the U.S. Energy Information Administration.

Crude oil inventories fell by 5.7 million barrels, according to the EIA, marking the fourth straight weekly decline. However, gasoline stockpiles were up 900,000 barrels for the week, while distillate stockpiles rose by 500,000 barrels.

The report also showed that domestic crude production slumped by 11% from the previous week to 8.4 million, as production had to be shut because of Hurricane Nate, which hit the U.S. Gulf coast earlier in October.

Prices received another boost amid expectations that major global producers will extend a deal to curb production beyond its current expiry date next March.

The original deal, struck nearly a year ago between OPEC and 10 other non-OPEC countries led by Russia, was to cut production by 1.8 million barrels a day for six months. The agreement was extended in May of this year for a period of nine months until March 2018 in a bid to reduce global oil inventories and support oil prices.

Meanwhile, oil traders continued to monitor geopolitical developments in Iraq's Kurdistan region, where Iraqi forces this week captured the Kurdish-held oil city of Kirkuk.

The fighting follows a referendum in which the Kurds, who run their own semiautonomous region in northern Iraq, voted overwhelmingly in favor of independence last month, defying Baghdad, regional powers and the U.S., triggering fears of supply disruptions.

Adding to these tensions, U.S. President Donald Trump last week refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide further action against Tehran.

Elsewhere on Nymex, gasoline futures added 0.5 cents to $1.655 a gallon, while heating oil was little changed at $1.803 a gallon.

Natural gas futures tacked on 2.3 cents to $2.877 per million British thermal units, as traders looked ahead to weekly storage data due later in the global day.

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