NEW YORK, Jan. 3 (UPI) -- Promises offset other physical market factors on the first full-trading day of 2017 to send crude oil prices to their highest levels in 18 months.
Monday was the first day that members of the Organization of Petroleum Exporting Countries were expected to start implementing the terms of a November deal to cut oil production by about as much as OPEC economists expect in demand for this year. Crude oil prices have moved sharply higher since the deal was reached, though compliance won't be verified for about a month.
Media outlets in Kuwait and Oman reported separately that Kuwait and Oman each cut production by about 170,000 barrels per day to open the year. Oman is not a member of OPEC, but has agreed to cooperate with a planned decline. Kuwait is obligated to cut about 130,000 bpd from production, the fourth largest amount of any OPEC member.
The price for Brent crude oil moved up 2.4 percent after the long holiday weekend to $58.18 per barrel at the start of trading Tuesday. West Texas Intermediate, the light, sweet crude that serves as the U.S. price for oil, was up 2.5 percent to open at $55.06 per barrel.
Abdullah al-Mandhari, the CEO of Omani energy company EOR, told the Times of Oman the price of oil could hit $80 per barrel, though the Times report itself said the OPEC production agreement could be impacted negatively should producers not party to the agreement ramp up their output.
An early-morning report from broker PVM finds Libyan crude oil production continued to expand during the long holiday weekend to 685,000 barrels per day, a sharp recovery from early 2016. Indonesia, meanwhile, is targeting a modest increase in production and Iran this week rolled out a list of more than two dozen foreign companies qualified to move back into the country as sanctions pressures ease.
Libya is exempt from the OPEC agreement, Indonesia's membership in the group was suspended after the November deal was signed and Iran is the only member state allowed to increase production.
Elsewhere, PVM said that, apart from countries exempt from the agreement, the OPEC-fueled rally in crude oil prices could bring producers in expensive U.S. shale basins back to work. U.S. crude oil production helped push the market toward the supply side and last week, data on exploration and production showed sustained increase in North America.