Oil prices resume their trend upward on word that Russia will throttle back on production gains for next year. File photo by Monika Graff/UPI |
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NEW YORK, Dec. 27 (UPI) -- A year-end gain in crude oil prices on the first full trading day after the Christmas holiday was boosted by OPEC and signals from a top Russian oil producer.
Crude oil prices have edged higher since late November when members of the Organization of Petroleum Exporting Countries agreed to production cuts starting in January. Oil prices had dropped below $30 per barrel on supply-side strains and the agreement is designed to bring balance back to the market more than prop up crude oil prices.
Most analysts see few reasons to doubt major producers like Saudi Arabia will deviate from their commitments, which would account for the bulk of what OPEC plans for production cuts. Last week, Russian President Vladimir Putin himself vowed to respect the terms of an agreement that counts on non-OPEC members for a good deal of the managed declines.
The price for Brent crude oil gained 0.65 percent at the start of a holiday-lightened trading week in New York to $55.52 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, gained 0.85 percent to open the day at $53.47 per barrel.
Gazprom Neft, one of the largest oil producers by volume in Russia, said it planned to slow production growth next year to meet the terms of the OPEC-led agreement.
"It is quite possible we will decide to freeze production at some wells," CEO Alexander Dyukov told reporters.
The company said production growth for next year, however, was planned at around 4.5 percent. Output for 2016 was more than 7 percent greater than the previous year.
The U.S. dollar index, meanwhile, edged slightly higher for Tuesday, which could drag on the rally as the increased value of the greenback diminishes buying power overseas. The rally may be supported in part by word that OPEC and other parties to the agreement are scheduling monitoring meetings for mid-January in Abu Dhabi.
Elsewhere, Libyan production could undermine broader OPEC efforts to remove excess barrels from the market. Libya is exempt from the production agreement outlined by OPEC.
