Oil prices stable as OPEC says market is rebalancing

SINGAPORE: Oil prices were steady on Tuesday as OPEC said there were clear signs the market was rebalancing and as U.S. production remained offline following Hurricane Nate.

U.S. West Texas Intermediate (WTI) crude futures were trading at $49.64 per barrel at 0352 GMT, up 6 cents, or 0.1 percent, from their last close.

Brent crude futures, the international benchmark for oil prices, were up 6 cents, or 0.1 percent, at $55.85 a barrel.

Prices were supported as the Organization of the Petroleum Exporting Countries (OPEC) said oil markets were rebalancing fast after years of oversupply.

"There is clear evidence that the market is rebalancing," OPEC's secretary general Mohammad Barkindo told Reuters on Monday.

"The process of global destocking continues, both onshore and offshore, with positive developments in recent months showing not only a quickening of the process but a massive drainage of oil tanks across all regions," he added.

OPEC has led an effort to cut output this year to end years of overproduction that created a huge supply overhang.

"Both Brent and WTI took some solace by comments from the OPEC Secretary-General that they (OPEC and other producers like Russia) were working to create an extension to the production cut deal ahead of the November OPEC meeting," said Jeffrey Halley of futures brokerage OANDA.

The cuts started in January and are set to expire at the end of March 2018.

There have been discussions about extending curbs, though no formal agreement has been reached.

JP Morgan said that previous "concerns that OPEC compliance would fade into the fourth quarter now appear unfounded" and that "stronger than assumed economic growth offers the potential for tight market conditions to continue if OPEC extends the current deal for another nine months".

The bank also said political disputes between the United States and Iran could drive oil prices higher.

Short-term price support was also coming from the United States, where 85 percent of U.S. Gulf of Mexico oil production, or 1.49 million barrels a day, was offline following Hurricane Nate, the U.S. Department of the Interior's Bureau of Safety and Environmental Enforcement said late on Monday.

Oil companies evacuated staff from Gulf platforms and curtailed output ahead of the storm, which hit the region last weekend.

But traders said they did not expect these disruptions to last long.

"Units that were shut down as a precautionary measure in the advent of Tropical storm Nate have commenced restarting of operations. Not much damage appears to have been done," said Sukrit Vijayakar, managing director of consultancy Trifecta.