World Oil price up as OPEC output cuts drain stocks

Oil prices had edged higher ahead of weekly US inventory data on evidence the global market is tightening as lower production by OPEC and other exporters drains stocks. Increased drilling in the United States, however, could keep a lid on prices. Brent futures gained 21 US cents, or 0.4 per cent, to settle at $US55.44 a barrel, while US West Texas Intermediate gained 43 US cents or 0.8 per cent, to $US53.18 per barrel. At 0800 Wednesday AEDT, Brent crude for March delivery was up 10 US cents, or 0.10 per cent, at $US55.33, while WTI was up 32 US cents, or 0.61 per cent, at $US53.07. That put WTI up for a fourth day in a row, its longest winning streak since the end of December. Ministers from the Organisation of the Petroleum Exporting Countries (OPEC) and big producers outside the group said on Sunday that of the almost 1.8 million barrels per day (bpd) they had agreed to remove from the market starting on January 1, 1.5 million bpd had already been cut. Saudi Arabia’s oil output is likely to drop to around 9.9 million bpd in January, according to industry sources and shipping data. The kingdom said it pumped 10.47 million bpd in December. “The comments out of OPEC are the primary reasons for the price increase on Tuesday. That and recent weakness in the (US) dollar, which is actually masking some serious weakness in oil,” said Phil Davis, managing partner at PSW Investments in Woodland Park, New Jersey. The US dollar settled at a seven-week low against a basket of currencies on Monday, but was up nearly 0.15 per cent Tuesday afternoon.

- news.com.au