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Oil prices rise above $55 a barrel on cold weather, production cut concerns

Oil prices rise above $55 a barrel on cold weather, production cut concerns

Oil prices rose above $55 a barrel Friday, buoyed by blustery weather in the northeastern U.S. and on expectations that OPEC will cut production as promised.
Light, sweet crude for March delivery on the New York Mercantile Exchange rose 81 cents to $55.04 a barrel in morning trading in New York. Brent crude rose 68 cents to $54.80 a barrel on the ICE Futures exchange in London.
"The market is thinking that OPEC compliance will be better as we go forward," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "Oil is looking very strong."
The Organization of Petroleum Exporting Countries said it would begin cutting production by 1.2 million barrels a day in November, but some traders speculate members are not complying. The cartel said late last year it planned to cut production another 500,000 barrels a day starting Feb. 1.
Tanker tracker Oil Movements reported Thursday that it expects exports from OPEC to rise in mid-February. The news sent oil prices down to settle at $54.23 Thursday after rising as high as $55.90 during earlier trading.
The market has since shrugged off the report, Flynn said, and has refocused on comments earlier this week from ConocoPhillips that made traders believe OPEC is going through with its production cuts.
On Wednesday, ConocoPhillips' Chief Executive Jim Mulva said that the company was firmly instructed to curb output in its Libya and Venezuela operations.
Victor Shum, energy analyst with Purvin & Gertz in Singapore, also pointed out that prices are being propped up by continued cold weather in the U.S. and the announcement Tuesday by the U.S. government to double the size of its Strategic Petroleum Reserve.
"If you look at trading this week, the market has found some support above the $50-a-barrel price mark. It appears to have found a floor due to a number of factors," Shum said.
Earlier this month, crude fell to $50 a barrel, but it rose about 10 percent over the past week as cold weather gripped the northeastern United States, a major consumer of heating oil.
In other Nymex trading, February heating oil futures gained more than 2 cents to $1.5775 a gallon, while natural gas rose 25.4 cents to $7.158 per 1,000 cubic feet.
Gasoline futures fell more than 2 cents to $1.4647 a gallon.


Updated : 2021-10-18 04:09 GMT+08:00