Oil prices up, but gains softening

NEW YORK, Dec. 13 (UPI) -- Crude oil prices opened Tuesday in positive territory as the OPEC-fueled euphoria continues, though gains may be softening as a limit starts to emerge.

The price for crude oil is up more than 30 percent from one month ago as traders take stock of market dynamics evolving since members of the Organization of Petroleum Exporting Countries and other producers agreed to limit production starting Jan. 1.

Parties to an agreement solidified the terms of an arrangement during the weekend to cut 1.2 million barrels per day from total production starting Jan. 1, though the deal counts on non-member states for about half of that. Non-members "proposed to adjust their oil production, voluntarily or through managed decline," OPEC said in a weekend statement.

Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in an emailed report that recent rallies started strong, but faded through the trading day. A failure to hold to early gains may be a sign that long-term horizons for crude oil are flattening out.

The price for Brent crude oil opened in weak territory in overnight trading, surged as high as 1 percent, but opened up 0.7 percent to start the trading day in New York at $56.03 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, was up 0.6 percent to open at $53.15 per barrel.

Speaking during a meeting with his Russian counterpart in Tehran, Iranian Oil Minister Bijan Zanganeh offered comments suggesting the rally may be reaching its limit.

"There are already indications that the price of oil is rising in global markets," he was quoted by state-funded broadcaster Press TV as saying. "Predicting the prices is difficult but I am certain that the prices will remain between $50 and $55 per barrel."

Some headwinds may be emerging as market indicators suggest supply-side pressures remain. A monthly report from the International Energy Agency finds OPEC members are producing at record highs as the Jan. 1 implementation day approaches.

The IEA suggests OPEC's move may be part of an effort to find a Goldilocks price for oil -- one that's not so low that it crimps investments and economic momentum, and not so high that it brings producers rushing back into more expensive basins like U.S. shale.

"These high-cost producers, who assume that the cuts at the very least guarantee a floor under prices, might think twice before taking the risk of sanctioning new investments," its report read.