REUTERS - Oil steadied above
$55 a barrel on Tuesday, drawing support from expectations of tighter supply
once the first output cut deal between OPEC and non-
OPEC producers in 15 years
takes effect on Sunday.
Jan. 1 is the
official start of the deal agreed by the Organization of Petroleum Exporting
Countries and several non-OPEC producers to lower production by almost 1.8
million barrels per day (bpd).
Brent crude LCOc1
was unchanged at $55.16 a barrel at 1128 GMT (6:28 a.m. ET) . The global
benchmark reached $57.89 on Dec. 12, the highest since July 2015. U.S. crude
CLc1 gained 15 cents to $53.17.
There was no trading
on Monday after the Christmas holiday, and volume was expected to be light on
Tuesday. Crude may struggle to rally much further before evidence is available
of OPEC's compliance with the cuts, analysts said.
"To go above
$60 is going to be difficult. We're already close to the top rather than the
bottom of the range right now," said Olivier Jakob, oil analyst at
Petromatrix.
"From January,
we'll start to have a better idea about the level of OPEC production. That is
going to be more and more of a focus."
Major OPEC members
such as Saudi Arabia and Iraq have informed customers of lower supplies. But
Libya and Nigeria - which are exempt from reductions because conflict has
curbed their output - have been increasing production.
Libyan output was
622,000 bpd on Monday, up slightly from levels recorded before an armed faction
agreed to lift a two-year blockade on major western pipelines on Dec. 14, the
National Oil Corporation (NOC) said.
While the outright
price of crude is being supported by the prospect of lower supplies, the impact
in the physical market will probably differ according to the type of crude.
Price differentials
for lighter crudes could weaken once the supply cut comes into force as
producers are expected to trim back output of their heavier grades, analysts at
JBC Energy said in a report.
"Going into
2017, we expect that the premiums for light, sweet grades may be increasingly
pressured as a result of the joint OPEC and non-OPEC output cut agreement which
is supposed to reduce primarily the availability of medium-sour crudes,"
JBC said.
REUTERS
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