Oil Prices Rise Amid Muted Holiday Trade
Investors await a landmark effort by oil producers to reduce global supply
Crude oil futures rose Tuesday amid muted holiday trading as investors remain in a wait-and-see mode ahead of a landmark effort by oil producers to reduce global supply.
U.S. crude for February delivery gained 88 cents, or 1.66%, to settle at $53.90 a barrel. Brent, the global benchmark, rose 93 cents, or 1.69%, to $56.09 a barrel.
Starting January, most members of the Organization of the Petroleum Exporting Countries and 11 other non-cartel producers are expected to scale back their production as part of a deal they made in the end of November. The reduction goal of roughly 1.8 million barrels is expected to be carried out in phases.
“The momentum is still higher,” said Ric Navy, senior vice president for energy futures at RJ O’Brien Associates. “I don’t think a lot of people want to stand in front of what’s going on.”
Oil prices have risen steadily throughout December and analysts believe they will breach the $60-a-barrel threshold in the first half of 2017.
“At this point, most market watchers are optimistic that participating nations will comply [with] the production quotas in the first few months,” said Gao Jian, a commodities analyst at SCI International.
However, it remains to be seen if the compliance will hold up once prices edge higher, he said, saying an important indicator would be inventory levels in these countries.
Written by Jenny W. Hsu and Kevin Baxter at The Wall Street Journal