Oil prices recovered from a
one-week low on Thursday as the International Energy Agency said oil markets
were tightening even before cuts agreed by OPEC and other producers took
effect.
Oil
prices have gyrated this year as the market's focus has swung from hopes that
oversupply may be curbed by output cuts announced by the Organization of the
Petroleum Exporting Countries and other producers to fears that a rebound in
U.S. shale production could swamp any such reductions.
Benchmark
Brent crude was up 50 cents at $54.42 a barrel by 1220 GMT after closing down
2.8 percent in the previous session. U.S. crude was up 40 cents at $51.48 a
barrel, having dropped to a one-week low on Wednesday of $50.91.
The IEA said that while it
was "far too soon" to gauge OPEC members' levels of compliance with
promised cuts, commercial oil inventories in the developed world fell for a
fourth consecutive month in November, with another decline projected for
December.
It
raised sharply its 2016 demand growth estimate, and said the data indicated
that rising demand was slowly tightening global oil markets.
Still,
analysts said it was crucial that OPEC and other producers cut output as
promised, particularly as a resilient U.S. shale industry threatened to add
more barrels to the market.
"Discipline
and strict adherence to the new quotas will be needed probably throughout 2017
and beyond to see the long-awaited and sustainable rebalancing finally
arrive," PVM Oil Associates analyst Tamas Varga said.
OPEC
has said its cuts will help balance the market and that its output had already
fallen in December. But it also pointed to the possibility of a rebound in U.S.
output amid higher oil prices.
The
head of the IEA, Fatih Birol, said in Davos, Switzerland, on Thursday that he
expected U.S. shale oil output to rebound by as much as 500,000 bpd over the
course of 2017, which would be a new record.
U.S.
data sent more mixed signals. American Petroleum Institute (API) data on
Wednesday showed U.S. crude stocks fell by 5.04 million barrels in the week to
Jan. 13, well above the expectations of a 342,000-barrel decline.
But
the data also showed larger-than-expected, and potentially bearish, increases
in stocks of gasoline and distillates.
Weekly
inventory data is due from the U.S. Energy Information Administration (EIA) at
1600 GMT.
(Reuters,
January 19 2017)