+ A
A -
Reuters
NEW YORK
Oil prices rose nearly 3 percent on Friday on expectations that a meeting of the world's top oil producers on Saturday and Sunday would demonstrate compliance to a global output cut deal.
A meeting in Vienna of members of the Organisation of the Petroleum Exporting Countries 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 by 1.8 million barrels per day (bpd), OPEC's secretary general told Reuters.
Saudi Arabia's energy minister said that 1.5 million bpd had already been taken out of the market, adding to signs that the oil market is rebalancing.
"The petroleum markets are moving higher in Friday trade on the latest round of positive talk about how much supply oil producers have taken offline ahead of Sunday's review by OPEC and non-OPEC representatives in Vienna," Tim Evans, Citi Futures' energy futures specialist, said in a note.
Brent crude rose by $1.56, or 2.9 percent, to $55.72 a barrel by 10:51 a.m. EST (6:51 pm local time).
US crude for February delivery was up by $1.51, or 2.9 percent, at $52.88 a barrel ahead of expiry. The more active March contract rose $1.42, or 2.7 percent, to $53.54.
Swelling oil stockpiles in the US and rising shale production could threaten market rebalancing, analysts said.
"For a lasting balance to be restored on the oil market and the very high stocks reduced, the agreement will need to be strictly implemented over a considerable period of time," Commerzbank said in a note.
"This is particularly true given that US oil production is rising again and given that the oil supply from Libya and Nigeria may be expanded."
US 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 soared 2.3 million barrels in the week to Jan. 13, while gasoline builds were much larger than expected, especially on the US East Coast where stocks swelled to the highest level on record for this time of year.
The market was also eyeing US drilling rig count data due after 1 p.m. as increased exploration and more efficient wells were boosting oil production.
Libya's National Oil Corporation (NOC) said production had now climbed to 722,000 bpd, 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 as the production cut deal had placed a floor price of $50, while US shale oil producers were capping the upside at $60.
