Azernews.Az

By Nigar Abbasova

World oil prices were slightly down on December 28 in a steadfast trading, while only a few days left until the start of the pact by the Organization of the Petroleum Exporting Countries and several non-cartel producers to put ceilings on oil production jointly.

Market watchdogs are waiting to see whether the producers will remain committed to their reduction pledges and carry through planned supply cuts in the New Year.

Brent crude futures were trading 13 cents or 0.2 percent down and stood at $55.96 a barrel, while U.S. benchmark WTI crude was at $53.83, recording a decrease of 7 cents.

While the landmark deal is set to come into force officially starting from January 1, 2017, a dominating tendency of the market is currently a wait-and-see approach. All forecasts on the situation in the oil market in 2017 depend on whether the deal will be successful.

The first two weeks of January are expected to be critical to watch, while forecasts of analysts are mixed and controversial. The deal is deemed to be very fragile to any misstep, non-supportive data or any indication of disagreement among the producers.

The most supportive year-end signs came from Venezuela, which will cut 95,000 bpd of oil production during the New Year. The country, which is among the nations, worst affected by a fall in crude revenues, currently produces just over 2.4 million barrels of crude and condensate per day.

Besides, Russian oil producer Gazprom Neft said it planned to boost oil output by 4.5 percent to 5 percent next year, less than it had intended before. In case of successful implementation of the deal, the prices are expected to settle at a ranging level of $60-$70, while the days of $100 oil are considered to be very far away.

Joint reduction volume by OPEC and non-OPEC states is expected to amount to almost 1.8 million bpd, while the largest contribution of some 486,000 bpd will fall to a share of OPEC de facto leader Saudi Arabia.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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