Oil held gains near $54 a barrel after the International Energy Agency said Opec achieved a record 90 percent initial compliance with its output-cut deal while demand grew faster than expected.
Futures were little changed in New York after advancing 3.2 percent over the previous three sessions. Saudi Arabia reduced production by more than it had pledged, while higher demand is helping to rebalance the market, the IEA said Friday. Opec is due to release its monthly report Monday, offering the group’s first update on its progress. In the US, drillers increased the rig count to the highest since October 2015, according to Baker Hughes Inc.
Oil has fluctuated above $50 a barrel since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply from Jan. 1 to ease a global glut. The market will shift into a deficit during the first half of this year and US crude stockpiles will shrink amid a decline in imports as the curbs take effect, Goldman Sachs Group Inc. said last week.
“If Opec confirms the compliance to cuts, there could be more upside from here for oil,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “At this stage, prices are still stuck within a range. Rising shale output is keeping a lid on gains at the moment.”
West Texas Intermediate for March delivery was at $53.72 a barrel on the New York Mercantile Exchange, down 14 cents, at 3:02 p.m. in Hong Kong. Total volume traded was about 43 percent below the 100-day average. The contract gained 86 cents to $53.86 on Friday. Prices averaged $52.61 last month.
Brent for April settlement traded 9 cents lower at $56.61 a barrel on the London-based ICE Futures Europe exchange. Prices advanced $1.07, or 1.9 percent, to $56.70 on Friday. The global benchmark traded at a premium of $2.39 to April WTI.
The 11 Opec nations bound by the accord reduced output by 1.12 million barrels a day to 29.93 million a day last month, according to the IEA report. Global oil inventories will fall by 600,000 barrels a day during the first half of the year if the group sticks to its agreement, the agency said.
Russia will decide in April or May on whether to extend the output-cut deal with Oped, Energy Minister Alexander Novak told reporters, according to a report from state news service RIA Novosti. The United Arab Emirates hopes to see more commitment to the production cuts in the coming months, especially from non-Opec members, Energy Minister Suhail Al-Mazrouei said in Dubai.