(C) Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo
By Shadia Nasralla
LONDON (Reuters) -Oil prices held steady on Thursday after rising above $80 a barrel this week, with bearish factors such as rising U.S. crude inventories and a strong dollar countered by an expected supply deficit over the coming months.
Brent crude for November delivery slipped in and out of positive territory during the session. The contract was down 21 cents at $78.43 a barrel by 1107 GMT on its expiry day while December loading crude was at $77.92. U.S. oil dipped 18 cents to $74.65.
U.S. oil and fuel stockpiles increased by 4.6 million barrels to 418.5 million barrels in the week to Sept. 24, the U.S. Energy Department’s Energy Information Administration (EIA) said on Wednesday. [EIA/S]
In another typically bearish development, the U.S. dollar held near one-year highs, making oil more expensive for holders of other currencies.
But expectations of a continued supply deficit supported prices. Citigroup (NYSE:C) is forecasting oil balances to be in a 1.5 million barrel per day deficit on average over the next six months, even with continued supply increases.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a grouping known as OPEC+, are next week expected to hold to a pact to add 400,000 barrels per day (bpd) to their output for November.
PVM analyst Tamas Varga said that expected growth in demand means that the agreed output increase would not be sufficient to prevent declining inventories for the rest of the year.
Last week’s rise in U.S. inventories came as production in the Gulf returned close to levels reached before Hurricane Ida struck about a month ago.
A possible dampener on oil prices has been the power crisis and housing market concerns in China, which have hit sentiment because any fallout for the world’s second-biggest economy is likely to affect oil demand, analysts have said.
China is the world’s biggest crude importer and its second-largest consumer behind the United States.
Oil steady despite higher U.S. inventories and strong dollar
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