In what is perceived as good news for major oil-producing countries, including those in the Gulf region, OPEC-led efforts have helped trim oversupply and keep prices high.
Brent crude was 80 cents higher at $56.39 a barrel while US light crude was up 70 cents at $53.63, reported Gulf Times.
The two benchmarks are now near the middle of $5-per-barrel trading ranges seen since early December.
“The usually fairly volatile oil price has barely budged for two months, the reason being conflicting dynamics in the market,” said Hans van Cleef, senior energy economist at ABN AMRO Bank in Amsterdam.
The Organization of the Petroleum Exporting Countries and other exporters including Russia have agreed to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017 in a bid to rein in a global fuel supply overhang.
But undermining these efforts has been rising production in the United States, where increased drilling activity especially by shale oil producers has lifted overall output to 8.98 million bpd. That is up 6.5% since mid-2016 and its highest level since April last year.
Although Opec countries are largely sticking to their agreement with compliance around 90%, investors suspect the cuts may not be maintained, preventing them from having a bigger impact on prices.
“Opec producers want the market to believe they will stick to the agreed production freeze (cut). But lessons from the past have made the market deeply suspicious,” van Cleef said.
Many analysts say oil producers will have to cut production more quickly to drain the global oversupply this year.
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