Oil rises as output cuts seen curbing glut

Bloomberg

Oil rose for the first time in three days after the dollar’s advance stalled and attention shifted back to projected production cuts.
Futures rose 2 percent in New York. Prices dropped the past two days as the dollar climbed against major peers after the Federal Reserve raised interest rates, which curbed the appeal of commodities to investors. Goldman Sachs Group Inc. increased its second-quarter oil price forecasts and predicted inventories would return to normal levels by the middle of 2017 as OPEC production cuts ripple through the market.
Oil has traded near $50 a barrel since the Organization of Petroleum Exporting Countries agreed Nov. 30 to trim output for the first time in eight years. A broader deal reached last weekend in Vienna with 11 non-members including Russia encompasses countries that pump about 60 percent of the world’s crude.
“The main reason we’re moving higher today is that the dollar is mostly flat,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $6.1 billion. “OPEC is getting the benefit of the doubt and there’s hope that the economy will grow strongly next year, which will be good for demand.”
West Texas Intermediate for January delivery rose $1 to close at $51.90 a barrel on the New York Mercantile Exchange. Total volume traded was about 19 percent below the 100-day average at 2:40 p.m. Prices closed at the highest since July 2015 on Tuesday and ended the week up 0.8 percent.
Brent for February settlement increased $1.19, or 2.2 percent, to $55.21 a barrel on the London-based ICE Futures Europe exchange. The North Sea oil climbed 1.6 percent this week. The global benchmark crude closed at a $2.26 premium to February WTI.