Oil prices climb as OPEC output deal comes into effect

Oil prices edged up on the first trading day of 2017 on Tuesday, and after the output cut deal between OPEC and non-member producers came in to effect on Jan 1.

International benchmark Brent crude was up 0.4 percent at $57.07 a barrel (bbl) by midday in the United Arab Emirates. WTI crude was up 0.5 percent at $53.98/bbl.

“From here on, the focus of crude market will turn to compliance, as historically OPEC and non-OPEC countries have cut far less than promised,” Bahrain-based SICO Investment Bank said in its latest oil markets update.

In a boost to the markets, Kuwait is said to have already implemented a production cut by reducing its output by 130,000 bpd to 2.75 million bpd, a local newspaper reported, citing Kuwait Oil Co. chief executive.

Last month, OPEC and other exporters, including Russia, struck an agreement to reduce production in an attempt to ease the supply glut and rebalance the market.

OPEC had agreed to slash output by 1.2 million barrels per day (bpd), while non-members opted to cut 558,000 bpd. Among non-members, Russia agreed to reduce 300,000 bpd; and within OPEC Saudi Arabia took the biggest cut of 486,000 bpd.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com