Oil is steady as investors regain confidence.

Oil is steady as investors regain confidence.
Oil is steady as investors regain confidence.
Tuesday February 21, 2017

Crude oil futures were stable to higher during the mid-afternoon trade in Asia Tuesday, as investors held their confidence in a more balanced oil market, with supporting data from producer-countries showing a reduction in supply.

At Singapore on Tuesday, April Brent crude futures were unchanged at $56.18/b, while NYMEX March light, sweet crude was at $53.67/b, up 27 cents/b (0.51%) from Friday's settle.

According to data from the Commodity Futures Trading Commission, speculative net long positions in WTI crude were at a record high of 421,926 contracts last week, while the net long bets on Brent crude over the same period also rose to 460,462, just short of a record high touched in mid- December 2016.

Some investors, however, were skeptical about the buying of oil contracts, warning that it was an overbought market, with the possibility of a price correction happening.

The US markets were closed on Monday for a holiday. But investor confidence was still there, on the back of OPEC producers complying with their agreed production-cuts.

Saudi Arabia's crude oil exports declined to 8.014 million b/d in December 2016, down 3.3% from the record high seen in November, the latest data from the kingdom showed.

This is the latest data available for the kingdom, ahead of its OPEC-led production-cut initiative, pledging to hold production at 32.5 million b/d from January 1, 2017 onwards, in order to rebalance the oil market and boost prices. Saudi Arabia itself agreed to cut production by 486,000 b/d to average 10.06 million b/d for six months from January.

Elsewhere, Russneft expects to at least match last year's 7 million mt (140,171 b/d) crude output and potentially exceed it if the state of oil markets improves and the OPEC/non-OPEC output-cut deal is not extended, the Russian company said in a statement on Monday. If supply and demand balance restores on the world oil market, the company plans to increase output by at least 2.5% year on year.

Privately owned Russneft is among the top 10 oil producers in Russia that will play a key role in the country's obligation to gradually reduce production by 300,000 b/d by May, under the six-month agreement with OPEC and other non-OPEC countries.


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