SINGAPORE Dec 19 Oil prices inched up on Monday
in anticipation of tighter crude supply going into 2017
following the decision by OPEC and other producers to cut output
to prop up prices.
Brent crude futures, the international benchmark for
oil prices, were trading at $55.41 per barrel at 0043 GMT, up 20
cents, or 0.36 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were up
22 cents, or 0.42 percent, at $52.12 a barrel.
Traders said the higher prices in front-month crude futures
were due to expectations of a tighter market from 2017.
The Organization of the Petroleum Exporting Countries (OPEC)
and other producers led by Russia have announced cutbacks of
almost 1.8 million barrels per day (bpd) in oil production from
January 2017 in an effort to bolster prices to reduce rampant
global overproduction which has seen output outstrip consumption
for over two years.
"With investors now expecting a relatively high level of
compliance with the production cut agreements, prices should be
well supported," ANZ bank said on Monday.
"Some weakness in U.S. dollar also helped improve investor
The dollar has lost 0.8 percent against a basket of other
leading currencies since hitting 2002 highs last week.
Swings in the dollar can affect oil demand as they influence
fuel prices for any country using its own currency domestically.
Despite this, there were factors that weighed on markets,
preventing prices - which remain relatively low - from rising
In the United States, which did not participate in the
agreement to cut output, drilling for new production has
increased for seven straight weeks.
Drillers added 12 oil rigs in the week to Dec. 16, bringing
the total count to 510, the highest since January, though still
below 541 rigs a year ago, energy services firm Baker Hughes
said on Friday.
U.S. oil production is also edging up, rising from under 8.5
million bpd in July to almost 8.8 million bpd by mid-December.
Traders also said that downward price pressure could come
from winding down financial crude futures ahead of Christmas.
(Reporting by Henning Gloystein; Editing by Joseph Radford)