Oil steady as expected output pact extension offsets U.S. supply

EIA forecasts Brent-WTI price spread narrowing to $4 per barrel in 2018

US to account for most world oil output growth over 10 years: IEA

Crude oil inventories rose by 1.9 million barrels in the November 10 week to 459.0 million, higher than market expectations, according to U.S. Energy Information Administration Wednesday.

Rising crude output, meanwhile, continued as preliminary USA production figures showed weekly output rose by 25,000 to an all-time high of 9.65 million barrels per day, the EIA said.

Refinery crude runs rose by 334,000 barrels per day, EIA data showed. Increased refining rates could eventually reduce crude inventories.

US West Texas Intermediate (WTI) crude futures were at $55.37 a barrel, 4c up from their last settlement.

Despite these slight gains, Brent and WTI have lost about 4% in value since hitting 2015 highs last week, pulled down in part by rising crude availability in the US.

"It's started to look like there's a little bit too much momentum, and the quality of the buyer coming into the market at the $56 to $57 level wasn't the smartest crude oil money", said Richard Hastings, macro strategist at Seaport Global Securities in Charlotte. That could mean world oil consumption may not breach 100 million bpd next year as many had expected.

IEA said it had cut its longer-term oil price projections from past year, partly because of the falling cost of both renewable and conventional sources of energy, the worldwide push to tackle climate change and improve air quality and the boom in USA shale oil and gas output. Also, supplies are likely to exceed that level, particularly as US production continues to rise.

Echoing the forecast by IEA, the Organisation of the Petroleum Exporting Countries said after long years of punishingly low oil prices, there is "increasing evidence" that the oil market is moving closer to reaching a healthy balance between supply and demand.

That deal is due to expire at the end of March 2018 but ministers have signaled that they are likely to extend the agreement, possibly until the end of next year.

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