Oil climbs above $62 amid producer promises to support markets

Ann Santiago
February 21, 2018

But in the latter part of 2017 and early in 2018, robust oil demand growth - both in emerging markets and OECD economies - has supported oil prices as much as the cartel's production restraint and the weakening USA dollar.

US West Texas Intermediate crude rose 34 cents, or 0.6 per cent, to $US61.68.

A more robust dollar makes oil and other dollar-denominated commodities more expensive for holders of other currencies.

Brent crude was up 34 cents at US$65.18 a barrel at 1356 GMT, after rising to an 11-day high of US$65.45 a barrel earlier in the session. The global benchmark ended the week up more than 3 per cent, partially recovering from a decline of more than 8 per cent last week.

OPEC and its partners chose to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

OPEC Secretary-General Mohammad Barkindo stated that oil demand worldwide for 2018 is expected to expand by 1.6 million barrels per day (bpd) on an encouraging environment.

"Opec and Russian Federation continue to support the production cuts that are due to expire at the end of this year, and they assure markets that there will be an orderly ramp up of production once the cuts expire", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

"Oil got mild support from gains in Asian equity markets, but has been getting pressure from the rise in USA rig count and a slight recovery in the dollar".

Al Mazrouei has some hope that the draft framework could even be endorsed and signed by all 24 countries before the end of the year.

Oil output in the country is already at 10.27 bpd, a record that put the United States just behind Russian Federation and ahead of Saudi Arabia, two of the world's top oil producers.

In any case the growing USA production threatens to undermine OPEC's efforts.

The American Petroleum Institute (API) is set to state its forecast regarding the USA crude supply on Wednesday.

The dollar steadied against a basket of currencies on Wednesday, having pulled up from three-year lows set last week as traders shaved off some of the bearish bets against the USA currency.

Gold shed 0.3 percent to 1,342.07, while gold futures for the April contract fell by 0.8 percent to $1,344.60.

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