Oil price rises as OPEC sticks to output pledges

Oil reversed earlier losses on Wednesday, March 1, as investors took heart from strict OPEC compliance with its pledge to cut output.

The Organisation of the Petroleum Exporting Countries reduced its oil output for a second month in February, a media survey found, showing the exporter group has boosted already strong compliance to around 94 per cent.

Heftier cuts by Saudi Arabia and Angola helped offset weaker compliance by other members that agreed to limit their output.

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May Brent crude futures were last up 27 cents at 56.78 dollars a barrel by 1030 GMT, while US West Texas Intermediate (WTI) futures for April were up 18 cents at 54.19 dollars.

Oil prices are 23 per cent higher than they were at the end of November, when OPEC announced its deal, but this strength has encouraged more US production to come back online.

“There seems … to be a consensus within OPEC that the optimal crude oil price is as near as possible to the upper line of our shale band price range…,” Olivier Jakob, a strategist at consultant Petromatrix said.