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