Global oil prices on Wednesday, February 22, crashed as the U.S. dollar in which payments for crude are made, rose but they traded broadly at multi-week highs after OPEC signaled optimism over its deal with other producers to curb output.
Brent crude LCOc1 was down 44 cents, or 0.8 percent, at $56.83, having touched its highest since Feb. 2 at $56.20 in the previous session.
The U.S. West Texas Intermediate April crude contract CLc1, the new front-month future, was down 34 cents, or 0.6 percent, at $53.99 a barrel at 0940 GMT (4:50 a.m. ET).
Nevertheless, an agreement by major oil producers under the OPEC umbrella, which came into place at the start of this year, lent a floor to oil prices.
Mohammad Barkindo, secretary general of the Organization of the Petroleum Exporting Countries, told a conference on Tuesday that January data showed conformity from member countries in the output cut at above 90 percent.
Adding to the bullish sentiment, hedge funds raised their combined net long position in the three main derivative contracts linked to Brent and WTI by 51 million barrels last week, holding a net long position equivalent to a record 903 million barrels of oil.
The combined net long position has a notional valuation of more than $49 billion.
Both OPEC’s Barkindo and Goldman Sachs, according to a new research note to clients, expect global inventories to fall, which would boost prices, Reuters reports.
