Oil extends gains on hopes for non-OPEC output cuts

Meanwhile, Saudi Arabia and Iraq will supply full contractual volumes of crude oil to Asian buyers in January despite Opec’s decision to cut production, sources said on Friday.

And although Russian Federation announced Wednesday that national oil companies backed cuts of 300,000 bdp, news agencies quoted Lukoil chief executive Vagit Alekperov as saying.

Russia, whose oil output hit a post-Soviet high in November at 11.21 million barrels per day, has committed to cut 300,000 bpd during the first half of next year.

OPEC last week agreed to cut output by 1.2 million barrels a day, equivalent to about 1% of global production, starting next month.

Many analysts believe that oil prices are likely to slowly trend higher into the coming year, now that OPEC has reasserted its willingness to nudge the market with production cuts.

Brent for February settlement fell $1.01, or 1.8 percent, to $53.93 a barrel on the London-based ICE Futures Europe exchange.

Prices for prompt Brent and WTI benchmark futures contracts have hit their highest in almost a year and a half, but this rush by the shale industry to hedge has capped the rally in prices of oil for delivery further in the future.

US crude for January delivery CLc1 was up 40 cents at $51.24 a barrel.

In this context, the oil market could correct to reasonable levels within six months, he said. Libya plans to raise production by another 300,000 bpd to 900,000 bpd – a rate of increase equal to Russia’s pledged output cut starting January 2017.

According to the association’s supply and demand of crude oil statistics, the country imported in October a total of 15,056,810 kiloliters of crude oil which is equal to 3.055 million bpd.

“There’s continued uncertainty about whether or not OPEC and some non-OPEC producers can effectively cut in accordance with the agreement, ” said Tony Headrick, energy analyst at CHS Hedging.

“All companies have supported our proposals for an oil production cap”, Olga Golant, spokeswoman for Novak, told reporters after the meeting.

The bet will pay off if both OPEC and non-OPEC oil producers become more disciplined and compliant, having been sufficiently chastened by the sharp decline in revenues and worldwide reserves.

As a result of a more balanced market next year, BMI said that “the average annual oil price will be higher in 2017 than in 2016, with Brent at $55 per barrel for the year”.

Due to all these factors, oil prices have been at rock bottom level for nearly two years.