Oil Rises Above $50 Despite Doubts Over OPEC Output Cut

Brent for February settlement lost as much as 62 cents, or 1.1 percent, to $54.32 a barrel on the London-based ICE Futures Europe exchange.

West Texas Intermediate for January delivery rose $1.07 to settle at $50.84 a barrel on the New York Mercantile Exchange.

Manulife Norinchukin Bank Holdings have commented that last week’s decision made by OPEC helped prices rally by about 15 percent has retracted due to data giving clear indications of rising production from its members and Russian Federation.

Previous production cut deals have been made in the past, it remains to be seen if members will follow through on the cuts, as well as the impacts on oil production in non-member nations, including Russia, Canada, and the U.S.

The United Arab Emirates’ energy minister said he was optimistic that non-OPEC producers would pledge cuts.

Opec agreed on Nov 30 to reduce its collective output for the first time in eight years, reversing a Saudi-led policy of pumping without limits to defend sales against an increased supply of higher-cost output, including some from shale deposits in the US.

Brent has averaged about $44.50 per barrel so far this year.

Saudi Arabia and Iraq will supply full contracted volumes of crude to Asia in January, despite OPEC’s commitments to cut output as they look to defend market share in the fastest growing region for oil demand, refinery sources said.

The agreement will see most OPEC countries cut their production by around 4.6%.

While Teagasc research analyst Laurence Shalloo said it was too early to predict how markets would be impacted by the sharp lift in oil prices, he said it should help underpin the recovery in dairy commodities.

OPEC and non-OPEC oil producers will meet again this weekend in Austria’s capital to discuss the details of last week’s agreement, which aims at an overall reduction in output of around 1.5 million barrels a day.

Crude prices boomed by nearly 9% to $49.20 per barrel as investors cheered the long-awaited deal.

“Firstly, this remains a growth business, with oil demand in OPEC’s 2016 World Oil Outlook reaching over 109 million barrels of oil a day by 2040, a healthy increase of over 16 million barrels a day”.

“Adherence to assigned OPEC quotas is apt to be limited and enforcement of such almost impossible”, Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.