Oil prices rally more than 1%, boosted by Opec pledge

The Sun (Malaysia) - - SUNBIZ -

LON­DON: Oil rose more than 1% yes­ter­day, boosted by a com­mit­ment from the Or­gan­i­sa­tion of Pe­tro­leum Ex­port­ing Coun­tries (Opec) to stick to a deal to cut out­put, but prices re­mained more than US$7 (RM29.50) be­low last month’s high due to per­sis­tent doubts over the fea­si­bil­ity of the group’s plan.

Brent crude traded at US$46.20 per bar­rel at 1157 GMT, up 62 cents, or 1.36%, from the pre­vi­ous close. US West Texas In­ter­me­di­ate crude was up 75 cents, or 1.7%, at US$44.82 a bar­rel.

Opec’s sec­re­tary-gen­eral 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.” – Reuters

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