Oil prices bounce as OPEC
promises a cut is on the cards
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[November 07, 2016]
By Libby George
(Reuters) - Oil rose more than 1 percent on Monday, boosted by a
commitment from OPEC to stick to a deal to cut output, but prices
remained more than $7 below last month's high due to persistent doubts
over the feasibility of the group's plan.
Brent crude traded at $46.20 per barrel at 1157 GMT, up 62 cents, or
1.36 percent, from the previous close.
U.S. West Texas Intermediate (WTI) crude was up 75 cents, or 1.7
percent, at $44.82 a barrel.
The secretary-general of the Organization of the Petroleum Exporting
Countries said the group was committed to an output-cutting deal made in
Algiers in September.
"We as OPEC, we remain committed to the Algiers accord that we ... put
together. All OPEC 14 (members), we remain committed to the
implementation," Mohammed Barkindo told reporters at a conference in Abu
Despite this, many analysts doubt OPEC's ability to coordinate a cut
sufficient to balance the market.
"Market belief that OPEC can reach a credible deal has collapsed and
prices are now $8 a barrel off the post-Algiers highs," David Hufton,
managing director of PVM Oil Associates, said in a note.
He cited record OPEC production in October, infighting between Iran and
Saudi Arabia, as well as calls from Iraq for its own exemption from any
"The numbers show that the best deal OPEC are likely to come up with is
well short of what is needed to achieve a balanced market in 2017,"
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Hedge fund and money manager cut bets on rising Brent crude for the
third consecutive week in the week to November 1, data from the
InterContinental Exchange showed.
Oil futures posted their biggest weekly percentage decline since January
last week with Brent falling as low as $45.08, its weakest since Aug.
11, and WTI hitting $43.57, its lowest since Sept. 20.
There are also risks that the oil glut, which has dogged markets for
over two years, could continue as OPEC's de-facto leader Saudi Arabia
threatened to increase production.
Even if Saudi Arabia does not follow through on that threat, its exports
"Saudi local oil demand is falling, and just maintaining current output
could imply higher exports," Barclays bank said.
There were also signs of rising future U.S. output as the number of
drilling rigs looking for new oil rose by nine to 450 in the week to
Nov. 4, the highest level since February.
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale
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