Oil prices swung higher on Thursday, January 12, buoyed by reports that the Organisation of Petroleum Exporters Countries, OPEC was starting to cut output and on expectations of strong demand growth in China
Brent crude oil LCOc1 jumped 25 cents at $55.35 a barrel by 0930 GMT (4:30 a.m. ET). U.S. crude CLc1 was up 5 cents at $52.30.
On the New York Mercantile Exchange, LIGHT, sweet crude futures for delivery in February CLH7, +0.47% climbed 25 cents, or 0.5%, to $52.49, on track for the highest settlement price since Friday.
The cartel agreed in November to cut oil production to try to reduce a global supply glut that has depressed prices for more than two years. Several OPEC members appear to be implementing the deal.
“Reports are emerging that OPEC signatories to the production cut agreement have already commenced reducing output,” said Daniel Hynes, commodities analyst at ANZ Research.
Iraq oil minister Jabar Ali al-Luaibi told reporters on Thursday that Iraq was “hoping for a better price”. Iraq had reduced its oil exports by 170,000 bpd and was cutting them by a further 40,000 bpd this week, he said.
Kuwaiti Oil Minister Essam Al-Marzouq told a conference on Thursday that Kuwait had already cut its oil output by more than it promised under the OPEC deal, without giving further details.
Saudi Arabia has earmarked some supply reductions for February to China, India and Malaysia and is focusing most of its cuts on Europe and the United States.
BMI Research said overall “compliance to the OPEC/non-OPEC oil production cut appears to be positive … (and that) we calculate compliance with production cuts at around 73 percent”, led by high compliance from members of the Gulf Cooperation Council, namely Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman.
Prices were also boosted by news of record Chinese car sales, which grew by 13.7 percent between 2015 and 2016 to 28 million sold vehicles, Reuters reports.
