Oil prices rise on signs of tighter market

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Compliance with Opec cuts was 86 per cent in the year to date

The U.S. West Texas Intermediate crude November contract was down 27 cents or about 0.53% at $51.03 a barrel by 03:45 a.m. ET (07:45 GMT), off Wednesday's more than one-week highs of $51.41.

However, part of the price difference between Brent and WTI partly reflects the expectations of increasing US liquid fuels production in 2018, according to the Energy Information Administration's just-released Short-Term Energy Outlook, aka, STEO.

In worldwide markets, Brent crude futures were at $56.51, up 26c or 0.5%.

Brent also rose 2 percent the previous day.

Crude inventories fell by 2.7 million barrels in the week to October 6, compared with analysts' expectations for a decrease of 2 million barrels.

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Oil prices rose on Friday as both USA crude production and inventories declined, pointing towards a tightening market.

"The rebalancing of the oil market has made significant progress over this time, although there is still some way to go to get back to the five-year average", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

The OPEC-led deal helped lift oil from below $30 a barrel early a year ago. Opec output remained "virtually unchanged" last month, and the IEA said compliance with its supply cuts for the year to date was 86 per cent.

Vitol is anticipating an increase in USA crude production of 0.5 to 0.6 million bpd in 2018, at which point the increase in production would cause cost inflation, rendering at least some of today's current production projects unprofitable.

"Our updated global supply-demand balance ... shows peak stock draws in 3Q17", Goldman Sachs said in a note to clients. For 2018, oil demand is expected to rise by 420,000 bpd vs 400,000 bpd previously.

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