Oil prices rose by more than $1 a barrel today after Opec's secretary-general said he was confident that the cartel would not just sustain but improve its compliance with promised production cuts. The fresh support to oil prices was driven by the massive decline in Saudi production, as its oil shipments declined to 8.014 million barrels a day in December, compared to 8.258 million bpd in November. Increased production and robust levels of imports have led to record inventories of both crude oil and gasoline.
Crude oil prices rose on Monday under thin trading conditions due to a USA bank holiday.
"There are a lot of folks positioned and rooting for a rally", John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone.
Iran's crude oil output was 3.9 million bpd in January, according to Iranian Oil Minister Bijan Namdar Zanganeh.
"At the crux of the matter is that 90 percent OPEC compliance is being balanced by ever increasing US shale production", he added. This news supported USA data which showed net long US crude oil futures and options positions in the week to February 14 were at a record.
"Confidence has returned to this market", he said at a news conference at Energy Institute's IP Week, an annual gathering of the oil trading industry in London. Transactions on Monday will be booked Tuesday for settlement purposes because of the U.S. Presidents' Day holiday. Kent Moors predicts oil prices could head up to 20% higher in the first half of the year. In BofA's view, USA shale oil producers will come out ahead and deliver outsized market share gains by 2022.
Barkindo said that the production data for January in OPEC's most recent monthly report showed conformity from participating OPEC nations with agreed output curbs above 90 percent.
Brent futures climbed 1.6% to $57.06 per barrel.
FXTM research analyst Lukman Otunuga opined that while oil prices could edge higher amid the supply cut optimism, the concealed concerns of USA shale boosting oil production and negatively impacting Opec's efforts could create some headwinds in the future.
Top Opec exporter Saudi Arabia's crude oil shipments fell in December to 8.014-million barrels per day from 8.258-million barrels per day in November, official data showed on Monday. Iraqi Prime Minister Haider Al-Abadi said oil prices need to reach $60 a barrel to fill budget gap, yet current prices are far better than those of two years ago.