Oil heads for second weekly gain

FILE PHOTO - A flag with the OPEC logo is seen before a news conference in Vienna

FILE PHOTO - A flag with the OPEC logo is seen before a news conference in Vienna

Published Jan 27, 2017

Share

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.

See also: Baker

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.

BLOOMBERG

Related Topics: