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Oil ends up, OPEC cut commitments assuage lingering doubts

Published 27/10/2016, 21:27
© Reuters. File photo of a worker walking past a pump jack on an oil field owned by Bashneft, Bashkortostan
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By Ethan Lou

NEW YORK (Reuters) - Oil settled higher on Thursday, as commitments from Gulf OPEC members to cut production assuaged some lingering doubts in the market about cooperation from other producers.

The international benchmark Brent crude was up 49 cents, or 1 percent, at $50.47 a barrel.

U.S. West Texas Intermediate crude gained 54 cents, or 1.1 percent, to $49.72.

"Another day, another market being pushed and prodded around by OPEC rhetoric," said Matt Smith, director of commodity research at energy data provider ClipperData.

Energy ministers from Saudi Arabia and Gulf allies told their Russian counterpart this week they are willing to reduce peak oil output by 4 percent, sources familiar with the matter said.

The Organization of the Petroleum Exporting Countries (OPEC) said last month it would restrain output to boost prices, which have been slumping at less than half their mid-2014 levels due to a persistent supply glut.

Iraq, however, has called for an exemption, adding to the list of members seeking special treatment. The expectation was that Libya, Nigeria and Iran should be exempt as their output had been hit by wars and sanctions, OPEC sources said.

Smith noted that overall OPEC exports have been rising, which would normally be bearish for the commodity.

While doubts linger about OPEC's ability to implement its production cut, the market has been leery of reading too much into it ahead of a meeting scheduled for the end of November, said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington.

"The market is reluctant to get significantly short in front of that because, obviously, a political decision could catch them on the wrong side," he said.

OPEC members are expected to have a technical meeting on Friday and a meeting with officials from non-member countries on Saturday. The cartel's oil ministers meet on Nov. 30, and are expected to work out how much individual countries should cut.

Prices were also boosted by a fall in U.S. crude stockpiles at the Cushing, Oklahoma, delivery base, which showed a weekly decrease of 650,000 barrels, traders said, citing data from energy monitoring service Genscape.

On Wednesday, the U.S. Energy Department said domestic crude stocks fell 553,000 barrels last week, the seventh such decline in the last eight weeks, adding to hopes that a long-awaited market rebalancing is taking place.

© Reuters. File photo of a worker walking past a pump jack on an oil field owned by Bashneft, Bashkortostan

(Additonal reporting by Alex Lawler in LONDON and Henning Gloystein in SINGAPORE; Editing by William Hardy, David Gregorio and Chris Reese)

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