Oil holds gains on hopes for non-OPEC output cuts

09 Dec, 2016 9:54 am

TOKYO – Oil prices were steady on Friday, holding around 2-percent gains from the previous session on optimism that non-OPEC producers might agree to cut output following a cartel agreement to limit production.

Brent and US benchmarks climbed on Thursday after the former secretary general of the Organization of the Petroleum Exporting Countries made comments supportive of non-member production cuts.

Russia has so far said it would cut 300,000 barrels per day, meaning other non-OPEC producers combined would need to pledge the same amount to lower output by the 600,000 bpd OPEC wants – half the reduction OPEC is making.

“An agreement by non-OPEC members to cut production is achievable, given support from Russia and a number of countries facing structural output declines,” BMI Research said in a note.

“However, the pace of these declines alongside technical challenges surrounding Russian production suggests the 600,000 bpd target will be difficult to achieve in full.”

London Brent crude for February delivery LCOc1 was down 5 cents at $53.84 a barrel by 0335 GMT, after settling up 89 cents on Thursday following two days of declines.

NYMEX crude for January delivery CLc1 was up 7 cents at $50.91 a barrel, after closing up $1.07 on Thursday. Both contracts are set for a weekly decline of around 1 percent.

OPEC has agreed to slash production by 1.2 million bpd in the first half of 2017, a deal that bolstered crude futures despite doubts over whether the amount was enough and whether the cuts would be effectively implemented.

It will meet non-OPEC nations in Vienna on Saturday seeking their help in curbing the global supply glut. Azerbaijan has said it would come to the Austrian capital armed with proposals for its own reduction.

Meanwhile, Saudi Arabia and Iraq will supply full contractual volumes of crude oil to Asian buyers in January despite OPEC’s decision to cut production, sources said on Friday.

Venezuelan President Nicolas Maduro said on Thursday he had agreed with Iran to call for a summit of heads of state from OPEC and non-OPEC countries in the first quarter of next year to decide on strategy for the oil market. -Reuters

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