Oil prices dip after OPEC-Russia output cut deal, focus swings to implementation
SINGAPORE – Oil prices slipped on Friday as some investors opted to cash out after Brent touched 16-month a high on Thursday, with optimism over this week’s OPEC-Russia accord on cutting output giving way to questions on the “sticking point” of implementing the deal.
International Brent crude oil futures LCOc1 were trading at $53.66 per barrel at 0242 GMT, down 28 cents, or 0.52 percent, from their last close. US West Texas Intermediate (WTI) futures CLc1 were at $50.92, down 14 cents, or 0.27 percent.
Brent and WTI futures had jumped more than 10 percent since Wednesday’s agreement by OPEC members and Russia to reduce crude production by a combined 1.5 million barrels per day.
Analysts are now focusing their attention on implementation of the deal, the first agreement since 2001 by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to coordinate production cuts.
“It looks achievable on the face of it, provided the parties to the latest production cut deal stick to their pledges, which has historically been somewhat of a sticking point,” ANZ bank said on Friday.
Still, traders said the market remained broadly optimistic in the longer term about an accord designed to help bring the oil market back into balance.
“This is positive news that will make a sustainable difference to the oil market over the coming months,” said Ric Spooner, chief market strategist at CMC Markets, adding that it wouldn’t be surprising to see momentum pick up.
Traders said price developments in crude futures over the coming days should provide evidence of the extent of the market’s optimism for the deal.
“WTI has arrived at the peaks from the middle of last year and again in October,” Spooner said, adding the next movements in the futures should provide insight into exactly how positively traders view this week’s agreement. -Reuters