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Oil prices rise on tightening supply, strong demand

25 October 2017

The disruption to exports from Iraq has helped support the market, adding to the supply cut being carried out by Opec and allied producers since January to get rid of excess supply.

Crude oil is dispensed into a bottle in this illustration photo June 1, 2017.

On the New York Mercantile Exchange crude futures for December delivery rose 0.10% to $51.95 a barrel, while on London's Intercontinental Exchange, gained 0.05% to $57.40 a barrel.

Meanwhile U.S. crude inventories likely fell by 2.5 million barrels last week, while gasoline and distillate stockpiles each probably fell by at least 1.5 million barrels, a preliminary Reuters poll showed on Monday ahead of data by the Industry group the American Petroleum Institute later in the day. U.S. crude fell 12 cents to $51.78.

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"It seems like there's an terrible lot of competing drivers ... and crude seems confused", said Stewart Glickman, head of energy research at CFRA Research in NY.

The US oil rig count fell by seven to 736 in the week to October 20, the lowest level since June, Baker Hughes data showed on Friday.

On the other hand, commercial oil stocks from the previous local US stocks glut is also expected to decrease tremendously after the massive stockpile due to the Hurricanes that terrorized several states and refineries.

Saudi Arabia and Iraq expressed satisfaction with the orientation of the global oil market towards recovery as a result of a deal to boost prices by limiting production, Saudi state media reported.

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Potential further steps by OPEC, rising global oil demand and the reduction in USA drilling and its crude oil stocks are some of the factors that could raise oil prices in the short term, said Frank Schallenberger, head of commodity research at Landesbank Baden-Wuerttemberg.

One more thing to look forward to this week is the decreasing numbers in the US crude inventories; reports revealed that the inventories have fallen by 2.5 million barrels from just last week.

Iraq's oil minister, Jabar al-Luaibi, Monday asked United Kingdom oil supermajor BP to help raise crude oil output from the Kirkuk oilfield to more than 700,000 barrels per day (BPD), after gaining control of the oil-rich region from Kurdish sources last week.

"I wouldn't be surprised to see WTI going up to $55 a barrel and Brent to $60 a barrel before the beginning of November", he said.

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Oil prices rise on tightening supply, strong demand