Oil Rises on OPEC Solidarity

Posted by Joseph Keefe

OPEC compliance in Jan. at 92 pct; some producers cut more than required -IEA.

Oil prices rose more than 1 percent on Friday after news that OPEC members' initial compliance with last year's landmark production cut deal reached a record high.

11 OPEC members with production targets under the deal complied with a record 92 percent of the targeted volume in January, according to the average assessments of the six secondary sources OPEC uses to monitor its output, which were seen by Reuters.

The International Energy Agency (IEA) also reported on Friday that OPEC members' cuts in January equated to 90 percent of the agreed volumes.

"Some producers, notably Saudi Arabia, (are) appearing to cut by more than required," the agency said in a report.

Global benchmark Brent crude was up 57 cents at $56.20 a barrel by 1144 GMT, touching a session high of $56.39 shortly after the IEA report's publication.

U.S. West Texas Intermediate (WTI) crude futures traded up 46 cents at $53.46.

The IEA, which advises industrial nations on energy policy, said that if current compliance levels are maintained, the global oil stocks overhang that has weighed on prices should fall by about 600,000 barrels per day (bpd) in the next six months.

The agency also raised global oil demand growth expectations for 2017 to 1.4 million bpd, up 100,000 bpd from its previous estimate.

Weekly U.S. rig count data will be published later on Friday by Baker Hughes, indicating whether drillers are continuing to ramp up activity.

Bjarne Schieldrop, chief commodities analyst at SEB, said he expects 198 new U.S. oil rigs to come into action this year, with 51 added so far this year.

"We calculate that one extra rig added today will lead to a stream of new wells which cumulatively will produce 5.3 million barrels to the end of 2019," he said.

By Karolin Schaps

Feb 10, 2017

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