Oil stable on firm U.S. data, but doubts over global output cut linger
U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were trading at $53.27 per barrel at 0746 GMT, up 1 cent from the last day’s settlement, when prices rose 2 percent.
WTI prices were supported by an American Petroleum Institute (API) report showing U.S. crude inventories fell 7.4 million barrels in the week ended Dec. 30 to stand at 482.7 million.
“API Inventories show a more-than-expected drawdown in crude oil inventories for this week,” said Jonathan Chan, oil analyst at Singapore-based brokerage Phillip Futures.
“It is highly expected that tonight’s Energy Information Administration (EIA) inventory numbers should also show a similarly large drawdown in crude oil inventories,” he added.
WTI was further supported by U.S. automobile sales, which were up 3.1 percent in December on the year to hit a record 17.55 million overall in 2016.
In international oil markets, benchmark Brent crude futures LCOc1 were trading at $56.40 per barrel, down 6 cents from their last close.
Brent’s weaker performance relative to WTI came on the back of doubts whether plans by the Organization of the Petroleum Exporting Countries (OPEC) and other leading producers to cut crude supply would be fully implemented.
“This OPEC agreement is certainly a problem waiting to happen,” said Matt Stanley, a fuel broker with Freight Investor Services International in Dubai.
“There remains a question mark over whether OPEC, with a long history of non-compliance, will actually follow through (with the cuts). Very few respondents expect full compliance,” Singapore Exchange (SGX) said on Thursday, citing results from a survey of its participants.
“Three-quarters of those surveyed went for (crude) prices averaging within the current $50-60/barrel range (for 2017),” SGX added.
Goldman Sachs said that even if the cuts were as deep as announced, there was “only moderate oil spot price upside given the expected supply response to higher oil prices and new production”.
The U.S. bank said that it expected “Brent prices to peak at $59 per barrel” by mid-2017.
In a sign of compliance with the cuts, major OPEC producer Abu Dhabi National Oil Company (ADNOC) has scheduled maintenance at oil fields for March and April, although it was not immediately clear how much exports might fall. -Reuters