London - Oil
headed for a second weekly increase as OPEC and other producing nations
maintained they would achieve their target of cutting production to reduce
bloated global inventories and stabilise the market.
Front-month
futures in New York are up 2.3 percent for the week, set for the biggest
advance since Dec. 2. OPEC and other producers are due to reach the 1.8
million-barrel-a-day reduction target next month, Algeria’s Energy Minister
Noureddine Boutarfa said Thursday. Nations are likely to fully comply with the
deal and the curbs will bring global crude markets into balance early this
year, Kuwait’s oil minister said Wednesday.
Last month’s
pact between the Organisation of Petroleum Exporting Countries and 11 other
nations gave hope to a market stuck in a two-and-a-half-year slump. While Saudi
Arabia says more than 80 percent of the agreed cuts have been implemented,
analysts and investors are still waiting for data to gauge the extent of the
decrease. The International Energy Agency says rising prices will spur US shale output, and drillers are adding more rigs.
“The market
sentiment is positive so any bullish news is being used as buying opportunity
while bearish news is being ignored,” said Carsten Fritsch, an analyst at
Commerzbank in Frankfurt. “The litmus test will come next week with OPEC
production surveys. If these surveys fail to show a substantial drop, the
optimism will be put to a test.”
West Texas
Intermediate for March delivery fell 15 cents to $53.63 a barrel on the New
York Mercantile Exchange as of 9:22 a.m. in London. Total volume traded was
about 38 percent below the 100-day average. The contract gained $1.03 to $53.78
on Thursday.
Output cuts
Brent for March
settlement dropped 28 cents to $55.96 a barrel on the London-based ICE Futures
Europe exchange. The contract added 2.1 percent to close at $56.24 on Thursday.
The global benchmark crude traded at a premium of $2.32 to WTI.
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Hughes is drilling in Middle East even as OPEC cuts
A committee that
was formed to monitor the production cuts will meet in Kuwait in mid-March,
Boutarfa said in Algiers. Some countries haven’t yet made the full output
reduction, but they will increase curbs over the coming months and all are
“highly committed” to the deal, Kuwait’s Oil Minister Essam Al-Marzouk said
Wednesday.