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SINGAPORE: Oil prices were stable early on Tuesday, supported by a tightening market due to ongoing OPEC-led efforts to cut supplies, although the prospect of rising US shale output dragged.
Brent crude futures, the international benchmark for oil prices, were at $60.78 per barrel at 0343 GMT. That was 12 cents below their last settlement, but still not far off the highest level since July 2015 reached earlier this week and up some 37 percent since their 2017-lows last June.
US West Texas Intermediate (WTI) crude futures were at $54.05 a barrel, 10 cents below their last close. But that was still near their highest level since February and up around 28 percent since 2017-lows marked in June.
Despite generally upbeat market sentiment, some analysts were cautious after several days dominated by strong price rises.
“US shale output could keep a lid on prices over the medium to long-term,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.
WTI’s $6.7 per barrel discount to Brent is a result of rising American crude production , which is up almost 13 percent since mid-2016 to 9.5 million barrels per day (bpd), making US crude exports highly profitable.
There are also technical chart indicators that warrant caution, analysts said.
“The relative strength indexes (RSI) on both contracts are at overbought levels. These could leave oil vulnerable to short-term corrections lower,” said Jeffrey Halley, senior market analyst at future brokerage OANDA.
An RSI is a trading momentum indicator in which a value of over 70 points is seen to be overbought. Brent’s current RSI is at 70.12 points.
The bullish market has been fueled by an effort led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets and prop up prices.
The pact runs to March 2018, but ��������Ƶ and Russia have voiced support to extend the agreement.
OPEC is scheduled to meet officially at its headquarters in Vienna, Austria, on Nov. 30.
“The fear of oversupply could easily turn to a fear of undersupply if inventories keep declining like they have been and demand continues to grow,” said William O’Loughlin, investment analyst at Rivkin Securities.