Oil headed for a second weekly increase as OPEC and other producing nations maintained they would achieve their target of cutting production to reduce bloated global inventories and stabilize the market.
Front-month futures in New York are up 2.2 percent for the week, set for the biggest advance since Dec. 2. OPEC and other producers are due to reach the 1.8 million barrel-a-day reduction target next month, Algeria’s Energy Minister Noureddine Boutarfa said Thursday. Nations are likely to fully comply with the deal and the curbs will bring global crude markets into balance early this year, Kuwait’s oil minister said Wednesday.
Last month’s pact between the Organization of Petroleum Exporting Countries and 11 other nations gave hope to a market stuck in a 2 1/2 year slump. While Saudi Arabia says more than 80 percent of the agreed cuts have been implemented, analysts and investors are waiting for data to gauge the extent of the decrease. The International Energy Agency says rising prices will spur U.S. shale output, and drillers are adding more rigs.
“The market sentiment is positive so any bullish news is being used as buying opportunity while bearish news is being ignored,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “The litmus test will come next week with OPEC production surveys. If these surveys fail to show a substantial drop, the optimism will be put to a test.”
West Texas Intermediate for March delivery fell 40 cents to $53.38 a barrel on the New York Mercantile Exchange just after 8:10 a.m. Central. The contract gained $1.03 to $53.78 on Thursday.
Brent for March settlement dropped 40 cents to $55.84 a barrel on the London-based ICE Futures Europe exchange. The contract added 2.1 percent to close at $56.24 on Thursday. The global benchmark crude traded at a premium of $2.25 to WTI.
A committee that was formed to monitor the production cuts will meet in Kuwait in mid-March, Boutarfa said in Algiers. Some countries haven’t yet made the full output reduction, but they will increase curbs over the coming months and all are “highly committed” to the deal, Kuwait’s Oil Minister Essam Al-Marzouk said Wednesday.