OPEC: Planned oil production cuts materialises

Russia's Novak says all oil firms to cut output under OPEC deal
Today 4:56 am Russia's Novak says all oil firms to cut output under OPEC deal Reuters Reuters

17 December, 2016

The price of February futures for Brent crude oil decreased by 0.17 percent and stood at $53.93 per barrel as of 05:54 EST, Dec.16. U.S. West Texas Intermediate (WTI) crude rose 91 cents, or 1.8 percent, to $51.81 per barrel.

That put both contracts on track to rise for a fourth week in the last five, Brent up 23 percent during that time and US up 19 percent.

This would diminish the impact of the recent production cuts agreed by the Organization of the Petroleum Exporting Countries, as well as nonmembers, totaling around 1.8 million barrels a day, or roughly 2% of the global supply.

On Friday, oilfield services provider Baker Hughes reported that active U.S. oil rigs rose by 12 to a total of 510 in the week ended December 16.

Those deals, clinched over the past two weeks, have boosted expectations in the market that a two-year supply overhang will clear soon and prices remain near highs last seen in July 2015.

According to sources from the client side who spoke to Reuters, Kuwait was cutting supplies above the so-called operational tolerance.

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Kuwait Petroleum Corporation (KPC) had already said on Tuesday it had officially notified its customers of a cut in their contractual crude oil supplies for January.

"Prices recovered as news emerged that Kuwait was said to be making bigger production cuts to USA and European customers", ANZ bank said on Friday. Rather, doubts about compliance among the group's members and that of non-OPEC producers have limited the upward potential of prices, restraining them comfortably below the US$55 mark.

Novak said earlier that the companies which account for 90 percent of oil production in Russian Federation had confirmed their readiness to voluntarily cut their output in the first half of 2017 in proportion to their shares as compared to October 2016.

Iraq, OPEC's second-biggest producer after Saudi Arabia, has signed new deals that will increase its sales to Asian customers such as China and India despite its commitment to reduce output by 210,000 bpd.

In the United States, meanwhile, energy companies this week added oil rigs for a seventh week in a row, extending a seven-month drilling recovery, according to data from Baker Hughes.

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