Oil rises as Opec aims for steep output cuts

Oil prices rose more than $1 a barrel on Tuesday after Organization of the Petroleum Exporting Countries (Opec) said it was sticking to its agreement to cut production and hoped compliance with the deal would be even higher.

Opec Secretary General Mohammad Barkindo said January data showed conformity from participating Opec nations with output curbs had been above 90 per cent and oil inventories would decline further this year. “All countries involved remain resolute in the determination to achieve a higher level of conformity,” Barkindo said in a speech in London.

Benchmark Brent crude oil jumped $1.13 a barrel to a high of $57.31 before easing to trade around $57.15 by 1125 GMT. US light crude was up $1.00 at $54.40, having risen by about 0.5 per cent in a shortened session on Monday because of a US national holiday. Opec and other producers outside the group agreed in November to cut output by about 1.8 million barrels per day in an effort to drain a glut that has depressed prices for over two years.

The cuts have spurred a speculative move into crude oil that has pushed prices towards the top of their recent ranges. Money managers now hold the highest volume of net long Brent futures and options on record, InterContinental Exchange data showed on Monday, betting on higher prices to come as Opec and other key exporters reduce production.