By Alison Sider and Sarah McFarlane
Crude oil prices ended the week lower, with all eyes on the extent to which pledges on production cuts are being met.
U.S. crude for February delivery settled down 64 cents, or 1.21%, at $52.37 a barrel on the New York Mercantile Exchange on Friday. Brent, the global benchmark, fell 56 cents, or 1%, to $55.45 a barrel on ICE Futures.
U.S. crude futures lost $1.62 a barrel this week -- the largest weekly decline since early November -- snapping a four-week streak of weekly price increases.
Oil prices have traded in a higher range since the Organization of the Petroleum Exporting Countries and 11 nonmembers of the bloc agreed late last year to cut production starting from this month. The pact, if fully implemented, could wipe out about 1.8 million barrels of excess oil a day. However, skepticism over participating nations' commitment to output quotas has weighed on prices.
"The market is in high level consolidation between $50 and something short of $55," said John Saucer, vice president of research and analysis at Mobius Risk Group. "It's waiting for a concrete signal to make a move."
Reports that OPEC members and other major producers are implementing planned cuts have boosted prices at times this week, with some analysts suggesting that producers could have coordinated their announcements of production cuts to reassure market participants and support prices.
Saudi Arabia, OPEC's de facto leader, said Thursday it had cut its production to less than 10 million barrels a day. If confirmed, the reduction would be more than the 486,000-barrel daily cut it had promised. The OPEC monthly report on January production will be released in mid-February.
The kingdom has also notified its customers in Asia that it would reduce supply to the region in February, according to reports.
"Saudi Arabia continues to show that the huge oil producer is actually walking the talk about cutting production and complying with the OPEC and non-OPEC deal," said Michael Poulsen, oil risk manager at Global Risk Manager.
According to BMI Research, the compliance rate among the signatories is currently 73%, pointing to follow-through from OPEC members including Saudi Arabia, the United Arab Emirates and Kuwait. Many analysts say that level of compliance is enough to bring down global crude stocks.
But some remain unconvinced.
"As the Saudis hint at even deeper reductions in February, assumptions are rife that its enthusiastic approach to output cuts is an admission that cheating is expected on the part of other producers," brokerage PVMsaid in a note. "Plenty of pitfalls lie ahead and we have reached the point whereby hard evidence of output restraint is needed if prices are to break out of their current range."
Market participants are also weighing a large build in U.S. oil and fuel inventories reported by the Energy Information Administration this week, said Andy Lipow, president of Lipow Oil Associates in Houston.
The market "is on the one hand looking at how much compliance we're seeing from OPEC and non-OPEC producers. On the other hand, it is trying to decide the impact of the significant inventory increases in products over the last two weeks, and whether products inventories are going to impact prices and put pressure on crude," Mr. Lipow said.
Data showing that Chinese crude imports hit a record 8.6 million barrels a day last month supported prices in overnight trading. But exports of fuel also surged.
"A lot of this so-called Chinese oil demand is being U-turned -- it is going right back out as refined products," said John Kilduff, founding partner of Again Capital.
Gasoline futures edged up 0.09 cent, or 0.06%, to $1.6117 a gallon. Diesel futures fell 2.42 cents, or 1.44%, to $1.6514 a gallon.
Jenny W. Hsu contributed to this article
Write to Alison Sider at email@example.com and Sarah McFarlane at firstname.lastname@example.org
(END) Dow Jones Newswires
January 13, 2017 16:15 ET (21:15 GMT)
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