Oil rose as the International Energy Agency (IEA) said OPEC has achieved a record 90 percent initial compliance with a production cut accord, while demand grew faster than expected.
Oil futures advanced 1.6 percent in New York.
In the first month of the OPEC agreement, key member Saudi Arabia reduced production by even more than it had committed, while higher demand is aiding the group’s bid to rebalance world markets, the IEA said.
Oil has fluctuated above US$50 a barrel since a deal to trim output between OPEC and 11 other crude exporters took effect on Jan. 1.
US producers are taking advantage of higher prices by boosting output, a dynamic the IEA said is capping prices in the mid-US$50s.
“It’s real positive that OPEC is at 90 percent compliance,” Mark Watkins, a Park City, Utah-based regional investment manager for the private client group at US Bank, which oversees US$136 billion in assets, said by telephone. “Their credibility is higher than it’s been in a long time. This proves that they are serious about supporting the price of oil.”
West Texas Intermediate (WTI) for next month delivery rose US$0.86 to settle at US$53.86 a barrel on the New York Mercantile Exchange. Total volume traded was about 15 percent above the 100-day average. The contract rose US$0.03 this week.
Brent for April settlement climbed US$1.07, or 1.9 percent, to US$56.70 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude dropped 0.2 percent this week. The contract closed at a US$2.37 premium to April WTI.
The IEA increased its estimates of last year’s world oil demand growth for a third month and boosted its outlook for this year, anticipating an increase of 1.4 million barrels a day this year.
World oil inventories is likely to fall by 600,000 barrels a day during the first half of the year if OPEC sticks to its deal, the IEA said.
OPEC is being joined by 11 non-members, including Russia and Kazakhstan, who implemented about half of their pledged cut of 558,000 barrels a day last month, preliminary data from the agency shows.
Data from OPEC itself, derived from six external sources including the IEA, showed a compliance rate of 92 percent, according to a person familiar with the matter.
The organization is to publish the statistics in its monthly report tomorrow.
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