The price of OPEC basket of thirteen crudes stood at $53.13 a barrel on Tuesday, compared with $53.30 the previous Friday, according to OPEC Secretariat calculations.
The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
Meanwhile, oil prices moved higher Wednesday as the dollar fell and analysts said they were expecting that U.S. stockpiles had declined last week.
Light, sweet crude for February delivery settled up 93 cents, or 1.8%, at $53.26 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 99 cents, or 1.8%, to $56.46 a barrel on ICE Futures Europe.
Early gains came after bullish Chinese economic data and positive signs regarding production cuts from the Organization of the Petroleum Exporting Countries.But many traders are skeptical about OPEC’s ability to follow through, which analysts said caused a small retreat later.
The dollar also influenced oil trading, analysts said. A weaker U.S. currency makes dollar-traded oil less expensive for foreign buyers, and so its price tends to rise as the dollar falls. The Wall Street Journal Dollar Index, which tracks the U.S. currency against 16 others, fell 0.6% Wednesday and spent most of the day in negative territory.
That helped oil recover from Tuesday, which had been oil’s worst day in nearly three weeks because of a rising dollar, said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. It would make sense for oil to rebound a bit anyway after such big losses with the OPEC cuts on the horizon, he added. “It was overdone,” Mr. Flynn said.
The market bounced higher after briefly dipping to match the lows of Tuesday’s session. That is a sign of bullish momentum that could keep technical traders bullish and the market in positive territory, brokerage iiTrader in Chicago told clients in a note. “Crude oil has seemingly stabilized from its free fall,” it said.
The American Petroleum Institute, an industry group, late Wednesday said its own data for the week showed a decrease of 7.4 million barrels in crude supplies, a rise of 4.3 million barrels in gasoline stocks and a 5.2-million-barrel increase in distillate inventories, according to a market participant. Official data from the Energy Information Administration is set for release Thursday.
Oil futures have veered between gains and losses in recent sessions as investors weighed the possibility of the market returning to balance this year, following a supply glut that has weighed on prices for more than two years. Most analysts expect a rebound in crude prices following the implementation of November’s production cut agreement by OPEC and other major oil-producing nations.
“Energy outperformed in 2016, and if OPEC delivers, it will happen again in 2017,” said analysts at Bernstein in a note to clients Wednesday.
The bank said it expects Brent crude to average $60 a barrel in 2017: “Compliance with OPEC quotas will be the key area for investors to focus on in the first half of the year.”
OPEC’s agreed cuts with other nations including Russia amount to 2% of global production. Prices rallied sharply on Tuesday after officials in Oman and Kuwait suggested they were in the process of enacting the cuts, bolstering confidence that the cartel would stick to its agreement.
Gasoline futures rose 2.41 cents, or 1.5%, to $1.6459 a gallon, now up 13 of the past 17 sessions. Diesel futures gained 1.63 cents, or 1%, to $1.693 a gallon, its sixth winning session in the past eight.