Oil prices rise as OPEC output cuts seen deeper than previously expected

Published 2018-12-20, 08:36 p/m
Oil prices rise as OPEC output cuts seen deeper than previously expected
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BEIJING/SINGAPORE, Dec 21 (Reuters) - Oil prices climbed on Friday after tumbling 5 percent in the last session, with OPEC production cuts that start next month seen being deeper then previously expected.

Benchmark Brent crude LCOc1 futures were up 1.51 percent at $55.17 per barrel at 0112 GMT, recovering from losses of $2.89 per barrel the session before.

U.S. West Texas Intermediate (WTI) crude futures CLc1 rose 1.53 percent, or 70 cents, to $46.58 per barrel.

The Organization of the Petroleum Exporting Countries plans to release a table detailing output cut quotas for its members and allies such as Russia in an effort to shore up the price of crude, OPEC's secretary-general said in a letter seen by Reuters on Thursday.

Mohammad Barkindo said to reach the proposed cut of 1.2 million barrels per day, the effective reduction for member countries was 3.02 percent.

That is higher than the initially discussed 2.5 percent as OPEC seeks to accommodate Iran, Libya and Venezuela, which are exempt from any requirement to cut. current oil prices will force OPEC to increase compliance with the production cut deals, supporting Brent prices," said Wang Xiao, head of crude research at Guotai Junan futures.

"The temporary recovery in prices has been driven by short- sellers buying back."

ANZ Research said in note that investors had been trading on macroeconomic factors and technical analysis rather than market fundamentals, keeping prices under pressure.

U.S. crude prices broke through a support level at $45.94 per barrel during the last session and rebounded after sinking to $45.67, their lowest since late August 2017.

Stephen Innes, head of trading for Asia-Pacific at OANDA said in note that market volatility was "getting exaggerated by immensely thin liquidity conditions, risk sentiment, and holiday market participation".

Oil Prices are down more than 30 percent from their peak in October.

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