By Nigar Abbasova
Oil markets edged higher on January 10 on expectations that at least some planned production cuts would be implemented, though optimism earlier surrounding the deal lost its ground due to several developments that may undermine efforts of major producers to oust global oversupply.
The crude prices slightly recovered from previous losses with Brent crude futures trading at $55.14 per barrel, 20 cents up from their last close, and U.S. West Texas Intermediate (WTI) standing at $52.12 per barrel, 16 cents up. Both faced almost a 4 percent lost on the previous day.
The small gains were mainly triggered by expectations that certain volume of cuts will materialize despite doubts.
A dark cloud is still hanging over the ability of OPEC and its partners to follow the output cut deal, as well as the sufficiency of joint measures for bringing a long-anticipated balance.
In the previous session crude plunged due to rising Iraqi exports from southern Basra ports that reached a record high of 3.51 million barrels per day (bpd) in December. However, OPEC's second-largest producer said unprecedentedly high exports would not affect the plans of the country to lower production in line with agreement.
Another deterrent came from Iran, which sold more than 13 million barrels of oil that it had long held on tankers at sea, capitalizing on the OPEC output cut deal from which it was exempted to regain market share and court new buyers. Besides, the volume of oil production in the country continues to rise.
The lower optimism came even though Russia, one of the world's largest crude producers reduces its production by 100,000 bpd in the first week of the month.
Another area of concern is increasing number of oil rigs in the U.S for a tenth week in a row, the number jumped up to 529, the highest figure since December 2015, according to Baker Hughes.
OPEC is expected to release the January production data in the short come and provide market watchdogs with a better idea on compliance.
Also, OPEC committee will meet in Vienna on January 21-22 to monitor compliance, agree on a final monitoring mechanism. The gathering is expected to provide evidence that the quotas are respected while the prices are likely to remain volatile till the gathering.
Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
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