Oil prices decrease after solid gains

Oil prices decrease after solid gains

Oil prices surged to their highest level since the summer of 2015, as analysts said the geopolitical risk in the Middle East helped underpin the market.

The price for Brent crude oil was down 0.42 percent to $63.42 per barrel as of 9:15 a.m. EST.

USA light crude was 15 cents higher at $56.96, just shy of this week's more than two-year high of $57.69 a barrel.

EIA forecast a steady drift lower for crude oil prices for the rest of the year, with Brent shedding as much as $7 per barrel for the 2018 average. Still, traders expressed caution that the oil price rally may have run its course after pushing up Brent more than 40 percent since July. "That's where oil prices find themselves this morning", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

The rally has largely been driven by crude output cuts from producing nations led by the Organization of the Petroleum Exporting Countries and Russian Federation.

There are also expectations in the market that OPEC's next meeting on November 30 will agree to extend cuts beyond the current expiry date in March 2018.

Oil prices settled slightly lower on Wednesday after USA government data showed rising domestic crude production, a surprise build in US stockpiles and a decline in monthly Chinese crude imports, a triple blow that was offset somewhat by rising tensions in the Middle East.

"With the OPEC/non-OPEC deal extension beyond March 2018 a certainty, prices may become stronger and temporarily reach the $65-$70 per barrel range in 2018", said energy consultancy FGE.

USA production was forecast to rise to 9.2 million barrels per day (bpd) in 2017 and a record 10.0 million bpd in 2018 from 8.9 million bpd in 2016, according to federal energy projections this week.

Analysts said an upward momentum in oil market appeared to be waning on Tuesday, as investors took profit after recent gains.

Output looks set to rise further. Texas issued 997 oil and gas drilling permits last month, up almost 17 percent from a year earlier.

Global fuel consumption remains strong, although the latest figures from top importer China were below expectations.

Key for the last weeks of the year is whether traders remain confident about their huge bets on further price rises, or whether they sell out of these positions, satisfied with recent strong gains.

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