Oil rose almost $1 to $54.35 a barrel on Tuesday morning after OPEC reiterated its agreement to further production cuts.
Crude oil production has come down in recent times, as the Organization of Petroleum Exporting Countries (OPEC) has chose to cut down production in view of the falling crude oil prices. The exporters group implemented about 90% of the pledged cuts last month and Goldman Sachs Group Inc. predicts the market will shift into deficit in the first half of this year.
Oil prices started the week in recovery mode following losses Friday sparked by signs of increased exploration and production activity in North America.
The global oil inventory in various parts of the world, however, continues to be high.
By contrast, South Korea's imports of crude oil from Saudi Arabia dropped by 17.3 percent in January compared to December 2016, to 785,084 barrels per day (bpd), because the kingdom is engaged in the OPEC cutbacks. With a $1.57 reduction, light crude of Iran was sold at $51.44 in Asian and European markets. This is taking place despite record crude and gasoline inventories in the US and signs that production may continue to increase over the near-term. But as the above data shows the road to higher prices may be longer than expected and during this time hedge funds will have to maintain their bullish belief in order to avoid disappointment which could trigger some aggressive long liquidation.
Speaking at a news conference during the International Petroleum Week conference in London, Barkindo did not rule out further cuts, if necessary, but said "it's too early for us to begin to second guess" what market conditions would be like when OPEC ministers next met on May 25 in Vienna. Transactions on Monday will be booked Tuesday for settlement purposes because of the U.S. Presidents Day holiday.
A chance for Israel and Palestinians
The struggle Mr Trump's equivocation provokes, however, must first play out in the internal politics of Israelis and Palestinians. That means bolstering Palestinian self-rule in big cities while building roads and bridges to ease movement across the West Bank.
On the fundamental front, we got word that OPEC is looking to step up its compliance with the late-November supply cut accord.
The NEB economist expects oil import volumes to remain relatively consistent over the next several years, unless oil producers in Western Canada send more of their crude eastward on rail cars. Since Mid-August, the price of Crude Oil has march confidently higher alongside many other commodities and commodity currencies.
OPEC Secretary General Mohammad Barkindo also said he was "cautiously optimistic" on the outlook for the oil market, nearly two months into the group's supply cut deal with Russian Federation and other producers.
Iran sold its light crude oil at $51.44 per barrel in the week ended on February 10, with $1.57 decrease from its previous week, IRNA reported on Sunday.
Oil prices inched higher on Monday, as investor optimism over the effectiveness of producer cuts encouraged record bets on a sustained rally, although growing United States output and stubbornly high stockpiles kept price gains in check. The cartel will hold two meetings in May, one for members and one for non-OPEC producers, according to Barkindo.