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Under the deal, Opec agreed to curb output by about 1.2 million barrels per day (bpd) from 1 January, the first cut in eight years. Russia and 10 other non-Opec producers agreed to cut around half as much. Photo: AFP
Under the deal, Opec agreed to curb output by about 1.2 million barrels per day (bpd) from 1 January, the first cut in eight years. Russia and 10 other non-Opec producers agreed to cut around half as much. Photo: AFP

Oil prices edge higher as Opec complies with output cut deal

The benchmark Brent crude oil added 0.2% to $56.03 a barrel by 1.06pm, while West Texas Intermediate crude oil was little changed at $54.06 a barrel

Singapore: Crude oil edged higher on Tuesday, underpinned by high compliance with the Organization of the Petroleum Exporting Countries (Opec’s) production cuts even as the market remains anchored by rising US production.

The Opec has so far surprised the market by showing record compliance with oil-output curbs, and could improve in coming months as the biggest laggards—the United Arab Emirates and Iraq—pledge to catch up quickly with their targets.

“With the prospect of Opec extending the current cuts even longer, we would expect to see prices continue to push higher from here," ANZ said in a note.

The benchmark Brent crude oil added 0.2% to $56.03 a barrel by 1.06pm, while West Texas Intermediate crude oil was little changed at $54.06 a barrel.

For the month, US crude oil is up 2.4% after falling in January, while Brent oil has risen marginally.

Under the deal, Opec agreed to curb output by about 1.2 million barrels per day (bpd) from 1 January, the first cut in eight years. Russia and 10 other non-Opec producers agreed to cut around half as much.

A Reuters survey of Opec production later this week will show compliance for February.

Also Read| Oil rides best rally in two months on bets Opec will hit its goals

Passive investment funds are poised to shift an estimated $2 billion from far-term to near-term crude futures over the next week, anticipating an energy market rally as the Opec output cut slashes supply.

At the same time, rising US oil production continues to limit gains.

“Talking about more Opec cuts, they can’t have too much higher cuts as it will lead to more U.S. shale oil coming into the market," said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.

US producers boosted crude production to over 9 million bpd during the week ended 17 February for the first time since April 2016 as energy firms search for more oil, according to federal data.

US drillers added five oil rigs in the week to 24 February, bringing the total count up to 602, the most since October 2015, energy services firm Baker Hughes Inc said on Friday.

A bearish target at $53.37 per barrel has been aborted for US oil, as it seems to have stabilized around a support at $53.99, said Wang Tao, Reuters market analyst for commodities and energy technicals.

Brent oil looks neutral in a range of $55.93-$57.26 per barrel, and an escape could suggest a direction. Reuters

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