Economy

Oil recovers some previous losses, but doubts over supply cuts linger

Oil recovers some previous losses, but doubts over supply cuts linger

Market participants had placed bets on oil prices rising after the Organization of the Petroleum Exporting Countries and 11 other non-cartel producers in November agreed to rein in their productions. Iran has sold more than 13 million barrels of oil that it had long held on tankers at sea, capitalizing on an OPEC output cut deal from which it is exempted to regain market share and court new buyers, according to industry sources and data.

According to reports, Russian Federation cut its oil output by 100,000 bpd in early January, but analysts at Vienna-based JBC Energy said: " It was not clear whether the lower volumes were related to announced cuts, weather (extremely cold temperatures were measured in Western Siberia), or other reasons".

Brent crude oil prices about an hour before the start of trading in NY were up a modest 0.3 percent to $55.10 per barrel.

BMI Research recently stated, as reported by Reuters: "Coordinated output cuts will support the market rebalancing that will draw down global stock levels, leading us to revise up our Brent crude forecast for 2017 to $57 per barrel".

Data out of the U.S. in December revealed that oil drillers were returning idled rigs back online at the fastest rate since March 2014, with 65 oil rigs added by the end of the month, bringing the total United States oil rig count up to 525 - the highest since last January. "And we definitely do not expect the Kurds to join in, given that they are autonomous from the federal government", Energy Aspects said in its 2017 oil market outlook, published this week.

Many feared dead as truck rams into Israeli soldiers in Jerusalem
Four Israeli officer cadets were killed and a dozen wounded when a Palestinian driving a truck ploughed into them deliberately. Israeli Prime Minister Benjamin Netanyahu said on Sunday the Palestinian truck driver was likely a supporter of Islamic State.

Light, sweet crude for February delivery rose 23 cents, or 0.4%, and settled at $53.99 a barrel on the New York Mercantile Exchange.

Crude oil prices lost major ground in Monday trading following a report on December exploration and production activity from oilfield services company Baker Hughes.

Many of the IOCs operating in Iraq help the country with its southern oil and gas fields, but the OPEC member may not find it any easier to cut production in the north. This could result in a meaningful upside to oil prices.

Fundamentals could also surprise on the upside if oil supply falls more than expected or consumption accelerates.

"Concerns regarding the sincerity, depth and duration of announced production cuts notwithstanding, most analysts, including us, see tighter-than-previously-envisaged balances for 2017", they said.


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