Oil near 2016 high as Venezuela affirms cut

LONDON, December 28, 2016 – February Brent crude futures reached USD 56.50 per barrel in London on Wednesday mid-afternoon, all but hitting 2016 oil price records as confidence in the production cut deal OPEC reached weeks ago spiked.

Venezuela, one of OPEC’s members that have been hardest-hit by the supply glut, helped reduce fears that the deal might not be implemented properly on Tuesday by announcing that it would cut some 95,000 bopd next year to help drive prices up.

Iraq’s oil minister, Jabar Ali Al Luaibi, also reaffirmed his country’s commitment to slash output by some 200,000-210,000 bopd on Wednesday during a visit to Kuwait.

Analysts surveyed by the Wall Street Journal said they expected the price of oil to top USD 60 a barrel in 2017.

“At this point, most market watchers are optimistic that participating nations will comply [with] the production quotas in the first few months,” Gao Jian of SCI International told the daily.

Concerns remained, nevertheless, about growing US crude stocks and rig counts which could help increase the supply glut and drive prices down over the medium term.

“Given current levels, U.S. crude inventories will almost certainly end 2016 higher than they began the year,” S&P Global Platts told MarketWatch.

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