By Sarah McFarlane and Jenny W. Hsu
Oil prices were steady on Thursday after the International Energy Agency reported record production from OPEC members while the outlook for growth in oil demand growth remained subdued, putting a lid on bullish sentiment.
Brent crude, the global oil benchmark, rose 0.7% to $46.70 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were unchanged at $45.27 a barrel.
The IEA's monthly report showed the Organization of the Petroleum Exporting Countries pumped a record 33.83 million barrels a day in October, making the scale of the output cut needed to stabilize prices being discussed by the cartel's members later this month look increasingly challenging.
"The IEA didn't change its forecast in terms of global oil demand, so the growth outlook is fairly lackluster at around 1.2, 1.3 million barrels a day, so that means that the issue of excess supply that permeates markets currently is going to extend into next year," said Harry Tchilinguirian, head of commodity strategy at BNP Paribas SA.
OPEC is set to meet Nov. 30 to approve a plan to cap the group's production to between 32.5 to 33 million barrels a day.
However, skeptics say even if an agreement is achieved, enforcement of individual production quotas would be weak. Furthermore, with many key producers already pumping close to peak capacity, freezing output at these levels wouldn't help abate the overhang soon.
"With record October output from both Russia and OPEC, producers [are] already pushing back the calendar on when the global market mightrebalance," said Tim Evans, a Citi Futures analyst.
Oil prices, along with global equities and other commodities, were volatile after Republican candidate Donald Trump surprised pollsters by winning the U.S. presidential race on Wednesday. Prices sank to month lows but r isk-aversion soon ebbed, followed by a rebound.
"Investors have brushed aside the shock of the Trump victory in the U.S. election and surged higher," said ANZ Research. However, with many of his policy measures still unknown, volatility is expected to be high in the coming days, it said.
A Trump presidency could lead to lower oil prices for longer given his strong support for U.S. frackers. The president-elect has favored plans to lift restrictions on tapping energy reserves, approve the Keystone XL pipeline, and cancel billions in payment to the United Nations climate-change programs. The move will likely buoy crude production in the U.S., analysts said.U.S. crude production is already on an uptrend as producers are eager to capture the rising prices. The Energy Information Administration this week raised the forecast on U.S. crude output, saying production would fall slower than expected, led by a ramp-up in drilling in west Texas.
The agency now expects U.S. oil output to average 8.84 million barrels a day this year and 8.73 million barrels a day next year, up from its earlier forecasts of 8.73 million in 2016 and 8.59 million in 2017.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--rose 0.9% to $1.37 a gallon. ICE gasoil changed hands at $424.50 a metric ton, up $5.00 from the previous settlement.
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(END) Dow Jones Newswires
November 10, 2016 06:42 ET (11:42 GMT)
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