Oil prices hold steady, propped up by US purchases
By Paul Carsten
LONDON (Reuters) -Oil prices held steady on Monday as U.S. efforts to replenish strategic reserves provided support, though concerns persist about oversupply and softer fuel demand growth next year.
Brent crude futures edged up 2 cents to $75.86 a barrel by 0913 GMT. U.S. West Texas Intermediate crude futures were up a single cent at $71.22.
Both contracts jumped more than 2% on Friday but were down for a seventh straight week, their longest streak of weekly declines since 2018, on lingering oversupply concerns.
The recent price weakness drew demand from the United States, which has sought up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) in March 2024.
«We know the Biden Administration is in the market looking to refill the SPR, which will provide support,» IG analyst Tony Sycamore said in a note, adding that prices were also being supported by technical chart indicators.
Despite the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, having pledged to cut 2.2 million barrels per day (bpd) of production in the first quarter, investors remain sceptical about compliance. Output growth in non-OPEC countries is expected to lead to excess supply next year.
RBC Capital Markets expects stock draws of 700,000 bpd in the first half, but only 140,000 bpd for the full year.
«Prices will remain volatile and directionless until the market sees clear data points pertaining to the voluntary output cuts,» RBC analysts said in a note.
With cuts not implemented until next month, oil faces a volatile two months before clarity from any quantifiable compliance data, the analysts said.
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