Brent oil rises on Citigroup price outlook

epa02373520 (FILE) A file photo dated 01 Junre 2009 of Iraqi workers at Tawke oil field in the town of Zakho, northern Iraq on 01 June 2009. Iraq has around 143 billion barrels of crude oil reserves, about 24 per cent more than previous estimates, the Iraqi Minister of Oil said on 04 October 2010. The reserves are mostly located in 66 oil fields in southern Iraq, Oil Minister Hussein al-Shahristani announced. This estimate places Iraq as the holder of the world?s fourth largest crude oil reserves, behind Saudi Arabia, Venezuela, and Canada. Previous estimates made in the 1990s placed oil reserves at 119 billion barrels.  EPA/KAMAL AKRAYI



Brent oil extended gains toward $57
a barrel as Citigroup Inc. raised its price outlook citing strong OPEC compliance with agreed output cuts and growing demand in Asia.
Futures rose 1.3 percent in London. Brent will average $55 this quarter, Citigroup said in a note, an increase of $5 from its previous forecast. The North Sea price benchmark is poised for its biggest shakeup in a decade with a new grade added to the mix from January. Russia plans to reach its pledged output cuts by the end of April, RIA Novosti reported, citing Russia Energy Minister Alexander Novak.
Oil has held above $50 a barrel since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply to ease a global glut. While the exporters group has implemented about 90 percent of the cuts and Goldman Sachs Group Inc. predicts the market will shift into deficit in the first half, U.S. crude stockpiles have increased to the highest level in more than three decades.
“There is positive sentiment with the OPEC cuts,” Hans van Cleef, senior energy economist at ABN Amro NV in Amsterdam, said by phone. “The weekly inventory cycle is starting again and that will probably lead to some profit taking.”
Brent for April settlement gained 71 cents to $56.90 a barrel on the London-based ICE Futures Europe exchange at 10:29 a.m. in London. The contract gained 37 cents to close at $56.18 on Monday. The global benchmark crude traded at a premium of $2.39 to April West Texas Intermediate.
WTI for March delivery, which expires Tuesday, was 79 cents higher at $54.19 a barrel on the New York Mercantile Exchange. Transactions on Monday will be booked on Tuesday for settlement purposes because of the U.S. Presidents Day holiday. The more-active April contract climbed 72 cents to $54.50.
“Oil prices are not likely to stray far from their current $53 to $58 range in the near term,” Ed Morse, global head of commodities research at Citigroup, wrote in a note Tuesday. “Record investor net length and bearish inventory data will likely cap prices until more tangible evidence of a tighter market emerges.”
The effects of high OPEC compliance with its historic output deal have yet to be realized and should support prices into the second quarter, Citigroup said. Compliance may even increase if Iraq’s March exports match the planned 600,000 barrel a day month-on-month cut indicated by loading programs, it said.
Norway’s Troll crude will be included alongside existing grades that make up the Dated Brent benchmark — Brent, Forties, Oseberg and Ekofisk, according to price assessor S&P Global Platts.

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