Singapore: Oil prices were stable on Thursday on expectations that Saudi Arabia and Russia would extend production cuts, although record U.S. exports and the return of supply from a Libyan oilfield dragged on the market.
Brent crude futures, the international benchmark for oil prices, were at $55.83 per barrel at 0538 GMT, up 3 cents from their previous close.
Russian President Vladimir Putin said on Wednesday that a pledge by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, to cut oil output to boost prices could be extended to the end of 2018, instead of expiring in March 2018.
The statement came ahead of a visit by Saudi Arabia’s King Salman to Moscow.
“Putin and Salman will most likely reach, but not announce, an agreement to extend the OPEC/non-OPEC production deal, though with a commitment to taper the cuts,” said consultancy Eurasia Group.
The pact on cutting output by about 1.8 million barrels per day (bpd) took effect in January this year.
Despite this, there were factors holding back crude prices.
In the United States, West Texas Intermediate (WTI) crude futures remained weaker than Brent, trading at $49.95 per barrel, down 3 cents from their last close.
That came after the Energy Information Administration (EIA) said late on Wednesday that U.S. crude oil exports jumped to 1.98 million bpd last week, surpassing the 1.5 million bpd record set the previous week.
The increase has been triggered by the wide discount in U.S. WTI prices against international Brent crude prices, which makes U.S. oil exports attractive.
Beyond short-term market drivers, analysts at Barclays bank said oil demand could be seriously dented by improving fuel-efficiency and the rise of electric vehicles (EV).
“EV uptake and increased fleet fuel-efficiency could cut oil demand by around 3.5 million bpd in 2025,” the bank said. That is almost as much as major OPEC member Iran produces.
Should the uptake of EVs rise to one-third of new cars by 2040, as many industry analysts expect, up from just 1 percent today, that could “affect oil demand by around 9 million bpd”, Barclays said.