Reuters - Oil rose on
Friday, edging closer to new 17-month highs, as producers showed signs of
adhering to a global deal to reduce output.
Brent futures
rose $1.07, or 2 percent, to $55.09 a barrel by 11:34 a.m. EST (1634 GMT). U.S.
West Texas Intermediate (WTI) crude rose 91 cents, or 1.8 percent, to $51.81
per barrel.
That put both
contracts on track to rise around 1 percent for the week, after easing less
than 1 percent last week.
Earlier on
Friday, the premium of the Brent front-month contract over the same U.S.
contract rose to $2.27 a barrel, putting it within a couple cents of its
highest mark since August.
"The
petroleum markets are extending their recovery from Thursday's low as some
confidence in planned production cuts returns to the market," Tim Evans,
Citi Futures' energy futures specialist, said in a note.
The
Organization of the Petroleum Exporting Countries has agreed to reduce output
by 1.2 million barrels per day (bpd) from Jan. 1, its first such deal since
2008. Russia and other non-OPEC producers plan to cut about half as much.
Those deals,
clinched over the past two weeks, have boosted expectations that a two-year
supply overhang will clear soon and prices remain near highs last seen in July
2015.
Russia said on
Friday that all of the country's oil companies, including top producer Rosneft,
had agreed to reduce output.
Other oil
producers including Kuwait and Saudi Arabia have notified customers that they
will cut from January.
"While
the market will eventually need to see some evidence of an actual reduction in
output, talk of production cuts and the notices of lower allocations sent to
refiners are sufficient to support market sentiment for now," Citi's Evans
said.
The prospect
of lower production led U.S. bank Goldman Sachs to raise its WTI price forecast
for the second quarter of 2017 to $57.50 per barrel from $55.
For Brent,
Goldman expects prices between $55 and $60 per barrel after the first half of
2017.
However, there
are doubts about the willingness of other OPEC members to reduce output.
Iraq, OPEC's
second-biggest producer after Saudi Arabia, has signed new deals that will
increase its sales to Asian customers such as China and India despite its
commitment to reduce output by 210,000 bpd.
Libya, which
is allowed to ramp up production as part of the OPEC deal, is close to
increasing output crimped by unrest after a group of oil guards said they
reopened a long-blockaded pipeline linking some of the country's biggest
oilfields.
Reuters
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