Crude Oil Jumps To USD55

Oil prices rose to 18-month highs Tuesday as OPEC and top nonmembers initiated their production cut deal on Sunday.

Oil climbed to an 18-month high in NY as output cuts by Kuwait and Oman signaled OPEC and its partners are delivering on their agreement to stabilize the market. Investors are hopeful that the deal will curb the oversupply of oil on the market, which has been weighing down prices for months. They, however, lowered their long-term oil and gas projections to $50 and $2.75, respectively.

LAGOS-Despite the agreement reached by members of the Organisation of Petroleum Exporting Countries, OPEC, and non-OPEC members to cut oil production, an expert has expressed fears that oil majors may sabotage the deal.

Oil prices will gradually rise towards $60 per barrel by the end of 2017, according to a Reuters poll of 29 analysts and economists.

But a big unknown is the non-Opec members, who have never previously been involved in a credible deal to cut output. Market participants said January will assist as a gauge for whether the OPEC and non-OPEC agreement to slash production will stick.

If maintained, the amount Libya is pumping would be about 125,000 barrels a day higher than the North African country was producing in October, the starting point for when most other OPEC nations are supposed to limit their collective supply.

Iraqi Oil Minister Jabbar al-Luaibi said his country was committed to cutting output by 200,000 to 210,000 barrels a day from the today, Kuwait’s state-run news agency KUNA reported on Thursday. Shell’s A shares rose 0.5 per cent to 2,252.75p. Their investment in assets also depends on oil prices as the revenue stream is highly relied on oil.

“In the face of a further strong rise in U.S. oil rigs in the first half of this year, we think it will be hard for Opec to agree to roll forward their production cuts into H2 2017”, he said. Experts feel that more such hikes could follow if crude and product prices in the global oil market continue the upsurge.

Distillate prices opened Tuesday at $1.6727/gallon.