Crude prices rise as OPEC cuts output as promised

Oil prices rose on Tuesday after news oil production of the Organization of the Petroleum Exporting Countries (OPEC) has fallen sharply this month, pointing to a strong start by the exporter group in implementing its first supply cut deal in eight years. 
A Reuters survey showed on Tuesday crude oil supply from the 11 OPEC members with production targets averaged 30.01 million barrels per day (bpd) in January, versus 31.17 million in December.
Overall, OPEC achieved 82 percent compliance with its promised production cuts, well above most market forecasts.
“This is very high, a good number,” an OPEC source said of the January compliance estimate.
Brent crude oil was up 50 cents a barrel at $55.73 by 1455 GMT. US light crude was up 60 cents at $53.23.
Both benchmarks have traded within fairly narrow ranges over the last two months, since OPEC and other big exporters agreed to cut output by almost 1.8 million bpd in an attempt to clear a global glut.
After an initial price rise on hopes that markets would rebalance quickly, Brent and US crude futures have both been held back by evidence of higher US oil drilling and forecasts of a rebound in shale production.
US shale output is slowly increasing, helping keep a lid on prices. Brent has been close to $55 a barrel and US crude not far from $52.50 for most of January.
“OPEC adherence to production targets has been strong,” said US investment bank Jefferies, but added that US drilling “activity levels are already picking up.”
Following months of increased drilling, US oil production has risen by 6.3 percent since July last year to almost 9 million bpd, according to data from the US Energy Information Administration (EIA).
Goldman Sachs estimates that year-on-year US oil “production will rise by 290,000 bpd in 2017” if a backlog on rigs that are still to become operational is accounted for.
The differing outlook between global oil markets and the US market has focused attention on the spread between Brent and US crude oil futures, also known as West Texas Intermediate (WTI).

Lebanon to start production
Lebanon expects to start oil production in 2018 and will deposit the resulting revenues into a sovereign wealth fund, President Michel Aoun said on Tuesday.
“Everything that is extracted will be for the Lebanese people,” he said during a meeting with a press syndicate delegation.
Aoun said the revenues would be invested in development projects and vowed to increase efforts to upgrade Lebanon’s crumbling infrastructure.
Lebanon has relaunched its first oil and gas exploration and production licensing round after a three-year delay, kick-starting the development of a hydrocarbon industry stalled by national political paralysis.
Minister of Energy and Water Cesar Abou Khalil said last week that Lebanon had opened five offshore blocks for bidding in a first licensing round.

Source : Arab News