Oil held gains above $53 a barrel as output cuts from OPEC and other producing nations are seen clearing a global inventory glut.
Futures were little changed in New York after rising 1.6 percent the previous two sessions. The global market will shift into deficit during the first half of this year and U.S. crude stockpiles will shrink amid a decline in imports as the OPEC-led curbs take effect, Goldman Sachs Group Inc. said this week. OPEC achieved the best compliance rate in its history at the outset of an accord to clear a surplus, the International Energy Agency said Friday.
Oil has fluctuated above $50 a barrel since a deal to trim output between the Organization of Petroleum Exporting Countries and 11 other nations took effect on Jan. 1. U.S. producers are taking advantage of higher prices by increasing drilling activity and boosting daily output to the highest level since April. OPEC is due to release its monthly report on Monday.
“If there is reasonable compliance to the cuts, there will probably be a strong price reaction before the headwinds come back into play, which is rising U.S. production and stockpiles,” said David Lennox, a resources analyst at Fat Prophets in Sydney. “Oil may have a sustained climb into the high $50s.”
West Texas Intermediate for March delivery was at $52.97 a barrel on the New York Mercantile Exchange, down 3 cents, at 9:01 a.m. in London. Total volume traded was about 32 percent below the 100-day average. The contract gained 66 cents to $53 on Thursday. Prices are down 1.5 percent this week.
Brent for April settlement was 8 cents higher at $55.71 a barrel on the London-based ICE Futures Europe exchange. The contract gained 51 cents to $55.63 on Thursday. Prices are down 1.9 percent this week. The global benchmark crude traded at a premium of $2.25 to WTI.
OPEC members implemented 90 percent of pledged cuts in January, the first month of its agreement, as Saudi Arabia reduced production by even more than it had committed, the IEA said in its monthly report. Resilient oil demand is aiding the group’s bid to re-balance markets, growing more than expected last year and is poised to do so again in 2017, according to the agency.
- China’s crude imports in January slipped from a record as refiners eased buying before the Lunar New Year break, when industrial activity tends to slow during the country’s most-important holiday.
- Saudi Arabian Oil Co. will sell full volumes of contractual supply for March to Asian refiners, according to people with knowledge of the matter who asked not to be identified because the information is private.
- Occidental Petroleum Corp. may double its U.S. Permian Basin oil production in the next four years after record-low costs to find and pump crude helped make it the company’s main profit driver.