Oil Stable After OPEC Suggests Extraordinary Measures

The Organization of the Petroleum Exporting Countries is seeking to hold a second meeting with U.S. independent oil firms as well as hedge funds, OPEC's Secretary General told Reuters, adding that no oil producer could afford to live in isolation.

Last year, the bloc and some others producers made a decision to reduce production by around 1.2 million barrels per day from January 1, 2017.

Brent crude futures LCOc1 were trading down 14 cents, or 0.3 percent, to $56.47 per barrel by 12:32 p.m. EDT (1232 GMT).

The United States is not participating in the supply cut, and its crude output has risen 10 percent this year to more than 9.5 million bpd. The group is increasingly confident that the market is rebalancing fast, helped by the cutback as well as by stronger-than-expected growth in global demand.

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"OPEC and key non-OPEC oil producers continue to successfully drain the oil market of excess barrels". Of that 170-MMbbl surplus, 145 million were crude and 25 million were oil products. "Between the first half and second half this year, demand growth is nearly about 2 million barrels (per day), which is very robust", he said.

Oil prices rose for the third day on Wednesday as OPEC forecast higher demand for 2018 and heightened tensions in Kurdistan supported prices.

The report also cited headwinds in 2018 for an expansion of supplies in USA shale, such as lower drilling efficiency and cost inflation.

"Oil prices are expected to remain at $50-55 in the next year".

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He also said Nigeria and Libya, who were exempted from the pact, "are making progress towards full recovery" of production, after which they could join the OPEC-led agreement. But analysts at JPMorgan said this was less of an issue, saying "concerns that OPEC compliance would fade into the fourth quarter now appear unfounded".

Read: What happens if OPEC maintains current levels of production? "A rise above that level would encourage US oil producers to expand their drilling activities, otherwise the lower prices could lead to a reduction in their capex".

Opec's forecasts see that in 2018 that both rising demand and non-Opec output will leave room for its members to pump more and reduce the glut in supplies.

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