By Jenny W. Hsu
Oil prices rose in Asia trade Friday morning on bargain-hunting and reports that Kuwait is reducing more of its supply than it previously pledged.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $51.20 a barrel at 0233 GMT, up $0.30 in the Globex electronic session. February Brent crude on London's ICE Futures exchange rose $0.28 to $54.30 a barrel.
Shares of regional energy companies have also risen in tandem with higher oil prices. China's Cnooc was up 1.2%, PetroChina rose 0.3%, while Japan's Inpex was 0.8% higher.
Oil prices rose after several media outlets reported that Kuwait Petroleum Corp. hadnotified its customers in the U.S. and Europe that it would scale back supply for January, said ANZ Research. The scope of the cut is said to be bigger than expected.
The fifth-largest producer in the Organization of the Petroleum Exporting Countries, Kuwait produced 2.78 million barrels a day in November, down 1.8%, or 51,300 barrels daily, from the previous month, according to an OPEC report based on secondary sources.
OPEC nations in late November agreed to cut production by 1.2 million barrels a day starting next month, as a two-year long overhang has depressed prices. The pact was followed by an agreement from 11 non-OPEC producers to cut their supplies by 558,000 barrels a day. The total sum is roughly 2% of the global supply.
If the producers adhere to the new production limits, the global oil market will shift to a deficit by the second half of next year, the cartel forecasts. Analysts said the expected drainage of excess of oil would push prices to the $60-$70-a-barrel band next year, and possibly to $80 by 2018.
"Next year's production cuts are likely to see the market supported with bargain hunters active in quality energy stocks on minor dips," said Ric Spooner, chief market analyst at CMC Markets.
However, in the short term, the upward momentum is weighed on by the stronger dollar, which has rallied around 2% since the U.S. Federal Reserve raised interest rates Wednesday. A stronger dollar makes oil more expensive for traders using other currencies.
U.S. rate increase are usually bad news for oil. Demand for crude in emerging markets, a growth driver for global consumption, tends to fall when U.S. rates rise, according to an analysis by Bank of America Merrill Lynch.
Nymex reformulated gasoline blendstock for January--the benchmark gasoline contract--rose 20 points to $1.5441 a gallon, while January diesel traded at $1.6512, 92 points higher.
ICE gasoil for January changed hands at $481.75 a metric ton, up $7.00 from Thursday's settlement.
Write to Jenny W. Hsu at firstname.lastname@example.org
(END) Dow Jones Newswires
December 15, 2016 22:46 ET (03:46 GMT)
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