Bloomberg: oil halts gain below $50 as Goldman sees rally supporting output
Oil halted gains below $50 a barrel as investors weighed falling U.S. stockpiles against speculation the recent price rally will encourage producers to raise output, Bloomberg reported.
Futures declined as much as 0.8% after advancing 2.3% Wednesday to the highest close in more than three months, Bloomberg wrote.
U.S. crude stockpiles last week fell below 500 million barrels for the first time since January, according to government data. The market is set to remain oversupplied in 2017 and prices will stall at $55 a barrel as shale drillers get back to work, Goldman Sachs Group Inc.'s head of commodities research Jeff Currie said in an interview.
Oil has gained about 11% since the Organization of Petroleum Exporting Countries (OPEC) agreed last week to cut production for the first time in eight years. OPEC, which pumped at a record in September, will decide on quotas at an official meeting of the group in Vienna on November 30. Hurricane Matthew is expected to intensify as it approaches the U.S. East coast, according to the report.
"There is a bit of a cap for oil at about $50 because above that level, once we head up toward $55 a barrel, there's concern that U.S. shale producers will jump back into action," said Michael McCarthy, chief market strategist in Sydney at CMC Markets.
"The positive momentum has brought oil prices back to the top of the trading range."
U.S. crude stockpiles dropped by 2.98 million barrels for a fifth weekly decline, the Energy Information Administration reported Wednesday. A Bloomberg survey had forecast a supply gain. Crude production declined for a second week to 8.5 million barrels a day.