Oil prices rose more than one per cent on Tuesday after news that the world’s top producers cut production in January more than forecasters had expected just as the dollar sank.
“This is very high, a good number,” an Organisation of Petroleum Exporting Countries source said of the January compliance estimate.
The dollar was down by 0.9 per cent versus a basket of currencies, boosting greenback-denominated oil.
The dollar was on course for its biggest monthly decline since March.
Brent crude oil for March was up 58 cents a barrel at $55.81 by 1:20pm EST (1800 GMT).
Brent for April delivery was up as much as 2 per cent, about $58 at the session high.
US light crude was up 76 cents at $53.39.
Prices pared gains slightly after Iraqi Prime Minister, Haider al-Abadi, said oil prices will not reach “levels desired” by Iraq before the end of 2018 or 2019.
Both benchmarks have traded within narrow ranges over the last two months since OPEC and other big exporters agreed to cut output by almost 1.8 million bpd.
“Direct oil market fundamental news seemed more mixed, with Iran claiming output in line with its OPEC agreement when the production level cited was still more than 100,000 bpd above its target.
“US refiners are still shutting more units for planned maintenance work,” Tim Evans said.
Iran, which was allowed to raise output under the OPEC deal because sanctions had crimped past supply, pumped an additional 20,000 bpd.
“March Brent crude oil, February heating oil (ULSD), and February RBOB gasoline futures all expire today and so book squaring will also be a feature,” Evans added.
After an initial price rise on hopes that markets would rebalance quickly, Brent and US crude futures have been pressured by evidence of higher US oil drilling and forecasts of a rebound in shale production.
Reuters/NAN.
