However, traders said a price rally that has pushed up Brent crude by over 40 percent since July may have run its course due to increases in U.S. supplies and some indicators of a demand slowdown.
Brent futures were at $63.66 per barrel at 0155 GMT, up 17 cents, or 0.3 percent, from their last close, but about $1 off the more than two-year high of $64.65 a barrel reached earlier this week.
U.S. West Texas Intermediate (WTI) crude was at $56.92 per barrel, up 11 cents, or 0.2 percent, but also some way off this week’s more than two-year high of $57.69 a barrel.
Key support was coming from efforts led by the Organisation of the Petroleum Exporting Countries (OPEC) and Russia to withhold supplies in order to tighten the market and prop up prices.
OPEC will discuss output policy during a meeting on November 30, and it is expected the group will extend the cuts beyond the current expiry date in March 2018.
“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.
Despite this, many analysts say the strong price rally of the past months has likely run its course,at least for now.
U.S. crude stockpiles rose 2.2 million barrels in the week to Nov. 3, to 457.14 million barrels, the Energy Information Administration said on Wednesday, contrary to analysts’ expectations for a decrease of 2.9 million barrels.
U.S. crude production inched up 67,000 barrels per day (bpd) to 9.62 million bpd, the highest on record.
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.
“It doesn’t matter how bullish the fundamentals are … when an asset goes vertical there is always room for a pullback and consolidation of recent price moves. That’s where oil prices find themselves this morning,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
FGE also warned that while fundamentals were strong for the coming months, the longer-term outlook was weaker due to rising U.S. shale production as well as a potential jump in OPEC’s and Russia’s supplies after the end of their voluntary cuts.
“This may result in lower prices in 2019,” FGE said. Source: Reuters