Oil prices improve as crude market continues to tighten

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This comes as OPEC forecasts higher demand for its oil in 2018 and its production-cutting deal with rival producers was clearing the glut after more than three years of excess.

"It is no secret to anyone that OPEC and USA shale producers have been battling each other in a production war since the dramatic decline in the price of oil has begun three years ago; however, each party would benefit from a stronger price of oil in the medium to longer term", said Ahmad.

Saudi Arabia said it pumped 9.97 million barrels per day in September, up about 22,000 barrels per day from August, but below its OPEC target. Oil has found support from the deal but, trading below $57 a barrel on Wednesday, crude is still half its mid-2014 level.

Oil prices have increased for the third consecutive day amid stronger indications that the crude market is gradually tightening following years of oversupply.

The 14-country producer group said its oil output in September, as assessed by secondary sources, came in below the demand forecast, even though output climbed slightly.

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OPEC and other producers, including Russian Federation, agreed to cut output by 1.8 million barrels per day (bpd) through March 2018 to balance the market.

The bank further added that by the end of this year Brent is expected to average around $53 per barrel, which so far averaged $52.70.

Bloomberg reported that the Brent benchmark had erased earlier declines to trade marginally higher at $55.62 a barrel, after the news of the Saudi oil allocations cuts.

Saudi Arabia and Russian Federation are now leading consultations between the Organization of Petroleum Exporting Countries and other major suppliers about the future of their agreement to cut oil output, Barkindo said Sunday in New Delhi.

If OPEC does decide to extend the agreement, oil prices should at the very least, hold firm, and could easily build on recent gains through the remainder of the years. OPEC has a scheduled meeting for the end of next month in Vienna. The main U.S. contract, WTI, was at $51.30.