Oil prices move higher with more OPEC commitments

NEW YORK, Jan. 5 (UPI) -- Additional commitment to an OPEC production agreement and a decline in U.S. inventories pushed crude oil prices higher in early Thursday trading.

Wednesday's session was marked by a high degree of volatility after a weak start marked by dueling narratives of production cut confirmations from Kuwait and Oman, but gains from Norway, one of Europe's leading oil and natural gas producers.

An agreement from the Organization of Petroleum Exporting Countries to trim production is aimed at balancing supply and demand. Oversupply in 2015 and through much of the first half of 2016 pulled crude oil prices to historic lows. Late Tuesday, the American Petroleum Institute reported a larger-than-expected decline in U.S. crude oil inventories, suggesting some of the supply-side strains were easing.

The price for Brent crude oil was up 0.9 percent to start the trading day in New York at $56.95 per barrel. Light, sweet crude -- West Texas Intermediate -- for the February contract was up 0.8 percent to open at $53.71 per barrel.

Oil prices surged to 18-month highs at the start of the trading week on optimism OPEC would comply with its production agreement. Iraq's oil minister said his country would follow through, but real compliance depends on whether official or industry data is used as a reference to measure true production figures.

The price for crude oil is reaching the point where producers in expensive U.S. shale basins are returning to work. Low crude oil prices in 2016 sidelined exploration and production work, though data from oilfield services company Baker Hughes show operators are returning.

Economists with the Texas Alliance of Energy Producers said that "there is every possibility" that crude oil prices will be held in check because OPEC's managed decline may in fact be offset by gains in the United States.

Crude oil prices may be impacted later in the day by an annual market outlook report from the U.S. Energy Information Administration. In its short-term market report for December, EIA revised its estimate for total U.S. crude production higher after finding the domestic sector was more resilient to lower prices than expected.