Oil prices climb as Citi raises forecast, OPEC targets 100% compliance

Melba UnderwoodFeb 22, 2017

Egypt may join the oil production limiting agreement, OPEC Secretary-General Mohammed Barkindo said at the press-conference on Tuesday.

USA energy companies added oil rigs for a fifth consecutive week, Baker Hughes said on Friday, extending a nine-month recovery with producers encouraged by higher prices, which have largely traded above $50 a barrel since late November.

On February 13, OPEC released a report that agreed with the earlier report from the IEA.

The cuts have spurred a speculative move into crude oil that has pushed prices towards the top of their recent ranges. While Crude Oil has lagged many of its commodity brethren, there does appear to be a unified march higher in the commodity field that could continue if the anticipation of inflation persists.

Speaking at International Petroleum Week in London, Barkindo said he's looking to start an "energy dialogue" with the US, rather than fret over the rise in supply from American oil producers.

"This is a new world that requires us to also adapt to the significant changes we've seen across the energy scene".

Heavy crude is typically more dense and viscous than other oil grades.

Mr Barkindo said: "Because of the level of commitment and enthusiasm to ensure that we achieve our objective of bringing this..." It was the first time in eight years that OPEC members had agreed to scale back output, and so far the accord has been seen as a success, with more than 90% compliance claimed.

According to InterContinental Exchange data released on Monday, money managers are holding record levels of long positions in Brent crude derivatives.

Barkindo said that oil inventories were expected to decline this year.

With production levels at 8.8 million barrels daily, the USA stood as the third-largest oil producer in December, according to Bloomberg, while Iraq and China followed at 4.5 million and 3.98 million barrels a day respectively. Transactions on Monday will be booked Tuesday for settlement purposes because of the U.S. Presidents Day holiday.

Oil prices inched higher on Monday, as investor optimism over the effectiveness of producer cuts encouraged record bets on a sustained rally, although growing U.S. output and stubbornly high stockpiles kept price gains in check. In BofA's view, US shale oil producers will come out ahead and deliver outsized market share gains by 2022.

International Brent crude oil finished the session at $56.17, up $0.36 or +0.65%. Iraqi Prime Minister Haider Al-Abadi said oil prices need to reach $60 a barrel to fill budget gap, yet current prices are far better than those of two years ago.

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