Oil stages biggest weekly rally since 2009

Oil prices steadied above $51 a barrel on Friday, with Brent crude on track for its biggest weekly rally since 2009, following OPEC’s decision to cut crude output in order to rein in a global glut. 
After the deal was announced on Wednesday, the market’s focus now shifts to the implementation and impact of OPEC’s first production agreement since 2008, which will be joined by non-OPEC producers.
Crude prices on Friday were pressured by data showing oil output in Russia rose in November to a post-Soviet high and news that Moscow would use its record November oil production as its baseline when it cuts output. 
Front-month Brent crude futures rose 24 cents to $54.18 a barrel, a 0.4 percent gain, by 1514 GMT. The contract was up nearly 15 percent for the week, its biggest gain since early 2009.
US crude rose 26 cents to $51.32 per barrel and was on track for its biggest weekly gain since August 2015.
Traders said profit-taking ahead of the weekend kept a lid on any more significant price gains.
A weak dollar, however, helped offset some of that pressure. The greenback slipped against a basket of currencies after the US November jobs report.
OPEC, which accounts for a third of global oil supply, will reduce production starting in January by 1.2 million barrels per day, or over 3 percent, to 32.5 million bpd.
Russia also agreed to cut output by 300,000 bpd. Russia and other non-OPEC producer are set to meet with OPEC on Dec. 9.
“There are still several open questions regarding compliance and the role of so-called ‘key non-OPEC countries’ in deepening the OPEC cut by a further 600,000 barrels per day (bpd),” JBC Energy said in a note.
In addition to Russia, traders also pointed to Iran as being a wild card.
US President-elect Donald Trump’s transition team is examining proposals for new non-nuclear sanctions on Iran, the Financial Times reported on Friday.
Iran also threatened on Friday to retaliate against the US Senate’s vote to extend the Iran Sanctions Act (ISA) for 10 years, saying it violated last year’s deal with six major powers that curbed its nuclear program.
The sanctions were first adopted in 1996 to punish investments in Iran’s energy industry and deter its pursuit of nuclear weapons.
With cuts being implemented next year only against end-2016 levels, analysts said there was still a possibility that oversupply, which has halved oil prices since 2014, remains a factor next year.
“Let us put OPEC’s decision into perspective — oil has just risen above $50 per barrel. Five months ago it was at similar levels, as indeed it was one month ago,” analysts at AB Bernstein said on Friday.
“More important is the sentiment — does this mean oil will now rise sustainably above $60 and start its long-awaited rebalancing? It is possible, but far from certain,” the analysts added.

Source: Arab News