Crude halted its biggest slide in more than a week as OPEC showed increased determination to curb production.
Futures were little changed in New York after backing down from a three-year high on Tuesday. Strict adherence by OPEC, Russia and other major producers to self-imposed supply limits has been counterbalanced by concern that hedge fund managers may begin unwinding a record level of bullish bets on crude prices.
“The market continues to take support from signs that OPEC and Russia’s compliance with their production cuts is really high and it doesn’t seem that there are any worries that there is cheating going on yet,” Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut, said by telephone.
Despite Tuesday’s price drop, crude remains close to levels last seen in December 2014. The Organization of Petroleum Countries and allied crude producers complied with their output limits at a rate of 125 percent in December, up from 122 percent a month earlier.
Discipline within the group should remain high this year, Kuwaiti Oil Minister Bakheet Al-Rashidi told reporters in Kuwait City. Citgroup Inc. said the cartel and its allies have already achieved their supply goals.
West Texas Intermediate for February delivery rose 3 cents to $63.76 a barrel at 10:21 a.m. on the New York Mercantile Exchange.
Brent for March settlement added 15 cents to $69.30 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.55 to March WTI.
The OPEC-led group won’t be discussing how to end output cuts when they meet this weekend in Oman despite the recent run-up in crude prices, Al-Rashidi said.
“There is no plan at all to talk about any exit strategy,” he said. “We are committed until the end of the year, this is the agreement.”
U.S. crude inventories probably declined by 3 million barrels last week, according to the median estimate of analysts in a Bloomberg survey. The U.S. Energy Information Administration is scheduled to release its weekly tally on Thursday. Stockpiles at the Cushing, Oklahoma, pipeline hub probably fell by 2.5 million barrels last week, according to a forecast compiled by Bloomberg.
“You continue to see the affects of increased demand and the production cut basically erasing that glut and supply that we had and that’s why the market continues to push higher,” McGillian said.
“We’ll have to wait and see what the inventory report shows tomorrow.”
The industry-funded American Petroleum Institute is scheduled to release its stockpiles data on Wednesday.
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