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Oil prices vacillate amid signs OPEC may be honoring its output cut pledge

Oil prices vacillate amid signs OPEC may be honoring its output cut pledge

Crude oil prices fell back below $55 a barrel Thursday, as traders took profits from the recent surge and doubts reemerged about OPEC compliance with output cuts.
A week ago, crude briefly fell below $50 a barrel, but it has since risen about $5, or 10 percent, as cold weather returned to the heating oil-consuming Northeast United States.
But the market gave back some of those gains Thursday, with light, sweet crude for March delivery on the New York Mercantile Exchange falling 61 cents to $54.76 a barrel in afternoon trading.
Prices had risen as high as $55.90 earlier in the day. They also had jumped a day earlier after ConocoPhillips' Chief Executive Jim Mulva said that the company was firmly instructed to curb output in its Libya and Venezuela operations. The comments led some traders to abandon their skepticism that the Organization of Petroleum Exporting Countries would not enforce the production cuts announced late last year.
But the skepticism returned to the markets, after tanker tracker Oil Movements said it expects OPEC exports to rise in mid-February, Dow Jones Newswires reported.
The market's inability to stay below $50 a barrel last week and its failure to maintain itself above $55 a barrel on Thursday show that prices may stay in this range for a while.
"The market does have an inherent strength, but it doesn't want to go below $50 or above $55," Mike Fitzpatrick at Fimat USA said.
The question now, analysts say, is whether OPEC has the power to keep prices afloat if the downward trend resumes.
"OPEC will try to maintain the $50 mark but they're fighting strong bearish sentiments in the financial market," said ANZ Global Natural Resources analyst Andrew Harrington in Sydney. "They're pedaling uphill."
On Wednesday, crude prices initially fell more than $1 a barrel after the U.S. Energy Information Administration reported a larger-than-expected build in gasoline stockpiles and a surprise increase in distillates. But prices later rebounded as traders considered other factors in the report, forecasts of colder weather in the U.S., and the ConocoPhillips comments.
The contract settled 33 cents higher at $55.37 a barrel Wednesday in New York, the highest settlement since Jan. 9.
In Nymex trading Thursday, heating oil futures for February fell 1.83 cents to $1.5656 a gallon.
Gasoline futures fell less than a cent to $1.4609 a gallon.
The energy market was also being pressured by natural gas, which dropped 31.7 cents to $7.104 per 1,000 cubic feet, despite the U.S. Energy Information Administration's report Thursday that 179 billion cubic feet of gas was withdrawn from storage last week.
On the ICE Futures exchange in London, Brent crude fell 79 cents to $54.64 a barrel.


Updated : 2021-04-10 19:11 GMT+08:00