Oil Holds Losses Near $55 as US Production Extends Record Run

Oil Holds Losses Near $55 as US Production Extends Record Run

Crude has climbed lately to a two-year high around $57 USA a barrel in trading in NY, although it is not seen making much larger gains due to rising U.S. output.

Oil prices held steady on Thursday, shrugging off the sudden rise of U.S. crude inventory data on hopes that an extended output cut decision by the Organization of the Petroleum Exporting Countries (OPEC) will be the end result of its November meeting.

The Energy Information Administration is out with the government's numbers this morning.

January WTI crude oil settled at $55.35, down $0.17 or -0.31% and February Brent crude oil closed at $61.29, down $0.47 or -0.76%.

Brent crude oil was $1.07 higher at $62.43 a barrel by 11:20 a.m. EST (1620 GMT) while U.S. West Texas Intermediate crude (WTI) rose $1.25 to $56.39 a barrel.

USA crude stockpiles rose by 1.85 million barrels last week, according to the EIA report.

"After all, the need to further extend the agreement shows that the strategy is not working", commodity researchers at Commerzbank said, adding that the "key factor" was rising USA shale oil output.

That compared with analyst expectations in a Reuters poll for a decrease of 2.2-million barrels.

The threat of higher shale production kept a lid on oil prices for much of 2017, but investors have recently become more optimistic on the market.

Overnight, crude oil settled lower for the third day amid ongoing concerns over rising United States output and build in crude stockpiles for the second week in row. This week's US oil rig count data, an early indicator of future output, is due at 1 p.m. Signs of rising USA output have dampened the impact of the deal restricting output agreed by the Organization of the Petroleum Exporting Countries (OPEC), Russia and several other producers.The agreement expires in March and was expected to be extended at OPEC's next meeting on November 30.

Gasoline supplies added 894,000 barrels, after three weeks of declines, but were contrary to expectations of a 919,000 barrel-loss.

On Tuesday, the International Energy Agency cut its oil demand growth forecast by 100,000 barrels per day for both 2017 and 2018.

OPEC is expecting that inventories would rapidly go down by 670,000 barrels a day through the year if they maintain the supply limit.

The price spread forecast for WTI-Brent in the EIA Short-Term Energy Outlook (STEO) for November was approximately $1 per barrel less than the previous month's forecast. Gasoline stockpiles also rose by 900,000 barrels for the week, while distillate stockpiles fell 800,000 barrels, according to the EIA.

-Christopher Alessi contributed to this article.

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