Oil prices were stable on Thursday, supported by ongoing OPEC-led supply cuts, tensions in West Asia and lower US production due to hurricane-enforced closures.

Brent crude futures were at $58.19 at 0641 GMT, close to their last close, and around 30 per cent above mid-year levels.US West Texas Intermediate (WTI) crude was at $52.03 per barrel, also close to its last settlement, but almost a quarter higher than in June.

Crude inventories

The US Energy Information Administration had said on Wednesday that US crude inventories fell 5.7 million barrels in the week to October 13 to 456.49 million barrels.

US output slumped by 11 percent from the previous week to 8.4 million barrels per day (bpd), its lowest since June 2014 as production had to be shut because of Hurricane Nate, which hit the US Gulf Coast earlier in October.

Analysts said there was also a risk to supply from political instability in areas ranging from West Asia to South America.

“Geopolitical risk has returned to the oil market... As a result, we have raised our ICE Brent forecast for 4Q17 from $45 per barrel to $52 per barrel,” Dutch bank ING said on Thursday.

“The 'Fragile Five' petrostates - Iran, Iraq, Libya, Nigeria and Venezuela - continue to see supply disruption potential, with northern Iraq crude exports at risk due to an escalation of tensions between the (Kurdistan Regional Government), Baghdad and Turkey, while the U.S. has decertified the 2015 Iran nuclear deal,” said US bank Citi.

Iraqi forces had this week captured the Kurdish-held oil city of Kirkuk, responding to a Kurdish independence referendum, triggering fears of supply disruptions.

Adding to these tensions, US President Donald Trump had last week refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide further action against Tehran.

During the previous round of sanctions against Iran, some 1 million bpd of oil was cut from markets. And analysts see crude supply tightening further as the Organization of the Petroleum Exporting Countries (OPEC) and partners, including Russia, are expected to extend a deal to curb production beyond its expiry date next March.

“OPEC is desperate to bring the market into equilibrium and mop up as much of the excess stockpiles ... I am expecting OPEC and Russia to agree on a further 9-month extension to production cuts,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.

Listing of Aramco

Political risk consultancy Eurasia Group said Saudi Arabia's plans to list state-owned oil giant Aramco would increase the pressure for extended production cuts.

“Saudi Arabia will seek a production sharing agreement extension ... as an IPO (of Saudi Aramco) remains part of the long-term plan,” the consultancy said.

“Price stability will remain a core part of the strategy ... The government still needs higher oil revenue to support its spending needs and reform programme.”

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