On Monday, oil prices inched higher with Brent oil set to increase for five out of seven sessions as a worldwide supply surplus appears to ease, but increasing U.S. output limited gains.
Brent crude oil (LCOc1) climbed 0.2 percent to $56.09 a barrel, while U.S. West Texas Intermediate (CLc1) added 0.1% to $54.04 a barrel, 09:59PM ET.
On Friday, oil prices plunged after U.S. Energy Information Administration data indicated U.S. crude inventories increase for a seventh straight week.
However, the market has been supported within a tight $4 to $5 range since November, when the Organization of the Petroleum Exporting Countries (OPEC) and other producers decided to reduce output.
“EIA data showed stocks rose 564,000 barrels to 518.7 million last week,” ANZ said in a note.
“However, it was the lowest increase over the past couple of months. If this trend of lower imports and smaller gains in inventories persists over the coming weeks, it would suggest that the OPEC, led production cuts are starting to have an impact.”
The Organization of the Petroleum Exporting Countries (OPEC) record compliance with the agreement has surprised the market, and the biggest laggards, the United Arab Emirates and Iraq have pledged to catch up with their objectives.
The International Energy Agency put OPEC’s average agreement at a record 90% in January, and based on a Reuters average of production surveys, it stands at 88%.
Saudi Arabia has offered to cut oil output if rival Iran caps its own production this year, four sources aware with the discussions stated, as Riyadh tries to strike an elusive Organization of the Petroleum Exporting Countries (OPEC )agreement to curtail supply and increase prices.
The U.S. Commodity Futures Trading Commission (CFTC) stated on Friday, money managers raised their net long U.S. crude futures and options positions in the week to Feb. 21, to the highest on record, based on data going back to at least 2009.
“The market is trading in a range. OPEC supply cuts are putting a base under the market at this stage,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
On the technical front, Brent oil may break support at $55.93 per barrel and decline more towards the next support at $54.81, as its consolidation within a wedge has not finished, according to the reports.
U.S. oil may further decline to support at $53.37 per barrel, as suggested by a Fibonacci projection analysis and a rising channel.
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