Oil price rises for
second day ahead of producers' compliance meeting
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[January 20, 2017]
By Karolin Schaps
(Reuters) - Oil prices edged up for a second day on Friday on
expectations that a weekend meeting of the world's top oil producers
would demonstrate compliance to a global output cut deal, but a larger
than expected rise in weekly U.S. crude stocks capped gains.
International benchmark Brent crude prices were up 58 cents at $54.74 a
barrel at 1214 GMT.
U.S. West Texas Intermediate (WTI) crude oil futures were trading up 52
cents at $51.89 a barrel.
"Prices were pushed down a bit too far and hopes will rise that the
OPEC/non-OPEC meeting this weekend will show that these producers
actually give some proof that they cut production," said Hans van Cleef,
senior energy economist at ABN Amro.
A weekend meeting in Vienna of members of the Organization of the
Petroleum Exporting Countries (OPEC) and some producers outside of the
group, including Russia, will establish a compliance mechanism to verify
producers are sticking to a deal to reduce output, OPEC's secretary
general told Reuters.
However, higher than expected crude oil and gasoline stocks in the
United States weighed on prices on Friday.
U.S. crude inventories rose unexpectedly last week as refineries sharply
slowed production, while gasoline stocks soared amid weak demand, the
Energy Information Administration said on Thursday.
Crude inventories rose 2.3 million barrels in the week to Jan. 13,
compared with analyst expectations for an increase of 342,000 barrels.
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Refinery workers walk inside the LyondellBasell oil refinery in
Houston, Texas March 6, 2013. REUTERS/Donna Carson/File Photo
data showed much larger than expected increases in gasoline stocks, with
inventories on the U.S. east coast, the biggest demand region, swelling to the
highest weekly levels on record for this time of year, when refiners typically
begin storing barrels ahead of the summer driving season.
to bearish news was the continuing rise in oil production from Libya, which is
exempt from the producers' output cut deal. Libya's National Oil Corporation (NOC)
said production had now climbed to 722,000 barrels per day, resuming its rise
after poor weather had caused a small dip.
Bjarne Schieldrop, chief commodities analyst at SEB Markets, said Brent crude
was starting to move into a trading range centred around $55 a barrel as the
production cut deal had placed a floor price of $50 a barrel, while U.S. shale
oil producers were capping the upside at $60 a barrel.
"As a new consensus is starting to form, the fog around the oil market balance
is starting to clear and the oil price is likely going to start to stabilize,"
(Additional reporting by Naveen Thukral in Singapore; Editing by Greg Mahlich
and Elaine Hardcastle)
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