Published: Thu, December 29, 2016
Economy | By Melissa Porter

Market Waits for Oil Supply Cuts

Oil prices were rising with less than a week until OPEC implements its first production cut in 8 years.

The February contract for global crude benchmark brent was up 0.03 per cent at $55.19 a barrel while its U.S. counterpart, West Texas Intermediate, gained 0.41 per cent to $53.25.

OPEC members agreed to cut production by 1.2 million barrels per day at the start of January and non-OPEC producers are to cut production by 600,000 barrels per day, citing two dozen countries are involved in the cuts. And, oil prices will only increase substantially if OPEC and non OPEC player like Russian Federation quickly reduce their output by 1.8 million barrels. Markets in the meantime remain optimistic about OPEC's willingness to stick to the output cut deal and CFTC data now show that the OPEC bears are feeling the squeeze and have now cut back bearish bets on WTI to levels not seen since August 2014.

The API data will be released on Wednesday at 4:30 p.m. EST (2130 GMT), while the EIA report has been rescheduled to Thursday at 11 a.m. EST (1600 GMT), following the federal holiday on Monday because of the Christmas holiday. Prices are up about 45% this year. It will be in line with the producers deal to increase oil prices and reduce supplies.

International Brent crude oil futures were yet to trade after closing 93 cents higher at $56.09. Moreover, there are also some worries in the market over the rising production in the US and Libya. The U.S. oil rig count rose by 13 to 523 last week, the highest level since January.

So far, the national average price for a gallon of gas is $2.29.

"I aspire to at least 10 years of stability with realistic, fair prices of oil, and I am going to achieve it".

The Kurdistan regional government in northern Iraq hasn't shown a willingness to join the accord reached by OPEC members to cut output, Rudaw news agency reports. Because of this combination, 2017 could be an excellent year for oil stocks.

While oil traders seem extremely bullish, storage fundamentals indicate larger crude stockpiles than one year ago around this time of the year. USA crude CLc1 gained 63 cents to $53.65.

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