Oil prices bounce as OPEC prom­ises a cut is on the cards

Kuwait Times - - BUSINESS -

Oil rose more than 1 per­cent yes­ter­day, boosted by a com­mit­ment from OPEC to stick to a deal to cut out­put, but prices re­mained more than $7 be­low last month’s high due to per­sis­tent doubts over the fea­si­bil­ity of the group’s plan. Brent crude traded at $46.20 per bar­rel at 1157 GMT, up 62 cents, or 1.36 per­cent, from the pre­vi­ous close.

US West Texas In­ter­me­di­ate (WTI) crude was up 75 cents, or 1.7 per­cent, at $44.82 a bar­rel. The sec­re­tary­gen­eral of the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries said the group was com­mit­ted to an out­put-cut­ting deal made in Al­giers in Septem­ber.

“We as OPEC, we re­main com­mit­ted to the Al­giers ac­cord that we ... put to­gether. All OPEC 14 (mem­bers), we re­main com­mit­ted to the im­ple­men­ta­tion,” Mo­hammed Barkindo told re­porters at a con­fer­ence in Abu Dhabi. De­spite this, many an­a­lysts doubt OPEC’s abil­ity to co­or­di­nate a cut suf­fi­cient to bal­ance the mar­ket. “Mar­ket be­lief that OPEC can reach a cred­i­ble deal has col­lapsed and prices are now $8 a bar­rel off the post-Al­giers highs,” David Hufton, man­ag­ing di­rec­tor of PVM Oil Associates, said in a note. He cited record OPEC pro­duc­tion in Oc­to­ber, in­fight­ing be­tween Iran and Saudi Ara­bia, as well as calls from Iraq for its own ex­emp­tion from any cut. “The num­bers show that the best deal OPEC are likely to come up with is well short of what is needed to achieve a bal­anced mar­ket in 2017,” Hufton said.

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