SINGAPORE, Nov 22 (Reuters): Oil prices jumped by 1.0 to 2.0 per cent on Wednesday as ongoing cuts of piped Canadian crude to the United States added to falling US crude inventories, while expectations of a prolonged OPEC-led production cut also offered support.
US West Texas Intermediate (WTI) crude futures were at $57.96 a barrel at 0753 GMT, up $1.13, or 2.0 per cent from their last settlement.
Brent crude futures, the international benchmark for oil prices, were at $63.30 per barrel, up 73 cents, or 1.2 per cent.
Traders said the firm price lift was due to drop in crude supplies from Canada to the United States.
TransCanada Corp said it will cut deliveries by at least 85 per cent on its 590,000-barrel-per-day (bpd) Keystone crude pipeline through the end of November. The pipeline, which links Alberta's oil sands to US refineries, was shut last week after a 5,000-barrel spill in South Dakota.
Traders said there was also some price support from a weekly report on Tuesday by the American Petroleum Institute which said US crude inventories fell by 6.4 million barrels in the week to Nov 17.
The latest official US production and inventory data is due on Wednesday.
Outside North America, markets have been supported by an effort led by the Organisation of the Petroleum Exporting Countries (OPEC) to restrain output to end a global supply overhang.
The deal to curb production is due to expire in March, but OPEC will meet on Nov 30 in Vienna to discuss the outlook for the policy.
"There is growing consensus that OPEC will extend their production cut deal at the end of the month. This confidence along with the current geopolitical environment has kept ICE Brent trading firmly above $60 per barrel," Dutch bank ING said on Wednesday.
"However, an outcome at the OPEC meeting which falls short of market expectations, will likely lead to a selloff, and given the large speculative long in Brent, this could be fairly severe," it added.
J P Morgan said in its 2018 commodities outlook, released late on Tuesday, that "oil markets in 2018 will be balanced on the back of extended ... production cuts," but added that without extended cuts markets would be in surplus.
Another report adds: Iran is pushing to retain customers for its oil in Asia, hoping that price reductions will boost the appeal of its crude compared with other Middle Eastern supply even as the potential threat of further US sanctions on the country looms.
The National Iranian Oil Company has in the last few weeks offered spot cargoes, ranging from light to heavy grades, to its term buyers in Asia, after setting December prices at the lowest in years against comparable Saudi grades, three sources with knowledge of the matter said.
The sources declined to be identified as they were not authorised to speak with media, while NIOC was not immediately available for comment.
That comes as US Congress has until mid-December to decide whether to reimpose sanctions on Iran that were lifted in exchange for it limiting its nuclear activity, with President Donald Trump disavowing Tehran's compliance with the terms of that deal.
"The threat of US Congress sanctions has put pressure on Iran to 'firm up' markets via discounts and freight adjustments for its crude," said Tilak Doshi, consultant at Muse & Stancil in Singapore.
NIOC first cut the official selling price (OSP) of Iran Heavy crude against Saudi's Arab Medium grade for October, before lowering it again for December. That puts the Iran Heavy price for December at the widest discount against Arab Medium in over a decade, data on Thomson Reuters Eikon showed.
Meanwhile, price cuts for Iranian Light placed the oil at its lowest premium in two years against Saudi Arabia's Arab Light.
The discounts were made to retain existing buyers of Iranian oil, which already have government-backed arrangements in place from when the original western sanctions hit Iran's oil exports in 2012-2014, the sources said.
Japanese and Indian buyers responded to the price cuts for October by increasing imports and are expected to keep volumes elevated due to competitive prices, trade sources said.
Iran's offers for December come weeks before the Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC producers meet on Nov 30 to decide whether to extend a deal to cut production and support prices.
They also follow rising Basra crude exports from Iraq and an increase in Qatari supplies in January that have been putting Iranian grades under pressure, said Ehsan Ul-Haq, director of crude oil and refined products at consultancy Resource Economist.
Still, traders and analysts do not expect a repeat of the battle for market share that was waged prior to OPEC's 2016 supply cut deal, with Tehran set to maintain steady output of about 3.8 million barrels per day and exports of 2.4 million-2.6 million bpd.
"They have maxed out their (export) volume unless they can increase production further," said a trader who handles Iranian oil.
