Yemisi Izuora
Oil prices eased on Friday after gaining 2 per cent the day before, but were supported by hopes the market will tighten more quickly than some had expected in the wake of supply cuts from major producers.
The output curbs by the Organisation of the Petroleum Exporting Countries and some non-OPEC producers including Russia could help create a supply deficit by the second quarter of next year, the International Energy Agency said on Thursday.
U.S. West Texas Intermediate (WTI) crude futures were at $52.42 per barrel down 0.3 percent from their last settlement, while the International benchmark Brent crude oil futures were at $61.06 per barrel down 39 cents, or 0.6 percent, from their last close.
Prices were edging lower during Asian trade as investors took profits after Thursday’s gains, analysts said.
U.S. crude prices climbed 2.8 per cent in the previous session, buoyed after data showed inventory declines in the United States.
“Crude oil prices rose (on Thursday) on further signs of tightening in the market,” ANZ bank said, adding that Saudi Arabia was entering “a new phase of its production cut agreement”.
As a part of the OPEC supply-cutting deal agreed last week, its de facto leader Saudi Arabia plans to reduce its own output to 10.2 million barrels per day (bpd) in January.
Elsewhere, Alberta Premier Rachel Notley earlier this month said the Western Canadian province would mandate temporary oil production cuts to deal with a pipeline bottleneck that has led to a glut of crude in storage and driven down Canadian crude prices.
“A key element to focus on I feel is the Canadian supply cuts as it sends a message that output is restricted by our ability to refine and transport,” said Jonathan Barratt, chief investment officer at Probis Securities in Sydney.
“Plus, if trade discussions go OK, then economic demand will support (oil) prices,” Barratt said.
In a sign that China is willing to lessen trade tensions with United States, the country made its first major U.S. soybean purchases in more than six months earlier this week.
Beijing also appears to be easing its high-tech industrial development push, dubbed ‘Made in China 2025’, which has long irked Washington.