Oil prices held steady on Thursday as U.S. crude inventories fell despite a rise in production, while outside the United States an OPEC-led supply cut continued to tighten the market.
Brent futures, the international benchmark for oil prices, were at $60.49 per barrel at 0040 GMT, flat from their last close. Brent has risen more than 35 percent since its 2017-lows last June.
U.S. West Texas Intermediate (WTI) crude was at $54.25 a barrel, down 5 cents from the last settlement, but is still some 30 percent above its 2017-low in June.
Traders said oil markets were being supported by falling U.S. commercial crude oil inventories despite rising output.
U.S. commercial crude oil inventories fell by 2.4 million barrels in the week to Oct. 27 to 454.9 million barrels, according to data from the Energy Information Administration (EIA) on Wednesday.
“U.S. crude inventories are back on a downward trend after disruptions from hurricane Harvey caused a small build,” said William O’Loughlin, investment analyst at Rivkin Securities.
This came despite a 46,000 barrels per day (bpd) increase in production to 9.6 million bpd. U.S. crude output is now up over 13 percent since mid-2016.
The EIA said that a record 2.1 million bpd of U.S. crude was exported in the latest week.
Traders said this was due to WTI’s wide discount to Brent which makes overseas sales profitable.
Outside the United States, confident market sentiment has been fueled by an effort this year lead by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets.
“OPEC supports the rebalancing process by maintaining high compliance to its production cuts,” said Ole Hansen, Head of Commodity Strategy at Denmark’s Saxo Bank.
Trade data shows that global oil markets have been slightly undersupplied during the past quarters, resulting in fuel inventory drawdowns.
The pact to withhold supplies runs to March 2018, but there is growing consensus to extend the deal to cover all of next year.