UPDATE 2-Oil markets tighten, Brent approaches $60 per barrel

Published 2017-10-26, 11:12 p/m
UPDATE 2-Oil markets tighten, Brent approaches $60 per barrel
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* Brent close to $60/bbl, near its highest since mid-2015

* Saudi Crown Prince backs extension of OPEC-led supply cuts

* Rising U.S. output keeps a lid on WTI gains (Adds U.S. oil chart, updates prices)

By Jane Chung

SEOUL, Oct 27 (Reuters) - Oil prices inched higher on Friday, with Brent crude approaching $60 a barrel amid tightening market expectations, buoyed by comments from Saudi Arabia's Crown Prince backing the extension of OPEC-led output cuts.

International benchmark Brent crude futures LCOc1 were up 10 cents, or 0.17 percent, at $59.40 a barrel at 0210 GMT.

Brent is now a third above 2017 lows touched in June and at levels last seen in mid-2015.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $52.64 per barrel, virtually unchanged from their last close, but up by a quarter from their June 2017 low.

WTI has been weaker relative to Brent as rising U.S. output has capped prices in the United States.

"Oil raced higher overnight with Brent finishing in sight of the magical $60 a barrel mark, spurred on by Saudi remarks supporting the oil production cut through to the end of 2018," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

Saudi Arabia's Crown Prince Mohammad bin Salman told Reuters on Thursday that the kingdom would support extending the output cut in a bid to stabilise oil demand and supply. Organization of Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia have pledged to curb their production by around 1.8 million barrels per day (bpd) until the end of March to drain a global supply glut. OPEC will meet on Nov. 30 in Vienna and is expected to discuss extending that agreement.

Oil prices have hovered near their highest for this year in recent weeks amid signs of a tightening market, talk of an extension of the cuts, and geopolitical risks in Iraq and Iran.

"Prices for both Brent and WTI are now approaching important recent range tops. My rhetorical self is bullish longer term and my system is already long," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Although the rising likelihood that OPEC will extend its output cuts raises expectations for a balanced market, U.S. crude production remains an issue for OPEC as it strives to clear a global overhang.

U.S. crude production C-OUT-EIA rose by 1.1 million bpd to 9.5 million bpd in the week ended Oct. 20, according to U.S. Energy Information Administration (EIA) data.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC: Brent crude oil prices

http://reut.rs/2yNgUvc GRAPHIC: U.S. oil production and inventories

http://reut.rs/2gMGvNV

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