U.S. oil traded near $53 a barrel as Iraq said it’s close to implementing its share of pledged output curbs agreed with OPEC to trim bloated global inventories.
Futures were little changed in New York after dropping 0.9 percent on Monday. Iraq, the second-biggest OPEC producer, has reduced supply by 180,000 barrels a day and will cut a further 30,000 a day by the end of the month, Oil Minister Jabbar Al-Luaibi said in an interview. Libya is planning to raise output by 75 percent by the end of this year, Mustafa Sanalla, chairman of Libyan National Oil Corp., said Tuesday.
Oil has held above $50 a barrel since the Organization of Petroleum Exporting Countries and 11 other nations agreed late last year to curb supply by about 1.8 million barrels a day. While Saudi Arabia says more than 80 percent of the targeted reduction has been implemented since the deal took effect Jan. 1, Goldman Sachs Group Inc. said Tuesday oil prices above $60 will bring back more production, including from shale. U.S. drillers last week added the most oil rigs since 2013.
“OPEC cuts trump rising U.S. rig count for now,” said Bjarne Schieldrop, chief commodities analyst at SEB AB bank in Oslo. “Also, most people’s belief that shale will respond at $60 makes the $60 attractive for prices like honey for bees.”
West Texas Intermediate for March delivery was little changed at $52.82 a barrel after earlier gaining as much as 55 cents to $53.30 on the New York Mercantile Exchange. Total volume traded was about 30 percent below the 100-day average. The contract fell 47 cents to $52.75 on Monday.
Brent for March settlement was also little changed at $55.28 a barrel as of 11:52 a.m. on the London-based ICE Futures Europe exchange. The contract dropped 26 cents to $55.23 on Monday. The global benchmark crude traded at a premium of $2.42 to WTI.
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While 90 percent of Iraq’s output cuts have come from fields operated by companies run by the federal government, Baghdad is also coordinating reductions with the semi-autonomous region of Kurdistan and international oil companies, Al-Luaibi said in London. It’s too early to say if the cuts could be extended beyond the initially agreed six-month term, he said.
OPEC member Libya, exempt from the supply cuts, is currently producing 715,000 barrels a day, the highest level in three years, Sanalla said in the text of speech given at a conference in London. He sees output at 1.25 million barrels a day by the end of 2017.