Global oil prices broadly flat, in tight range

LONDON: Global oil prices were broadly flat on Tuesday, continuing to trade in a tight range with the Organisation of the Petroleum Exporting Countries (Opec) bullish production cuts offset by increasing crude production from the United States.
The Opec has so far surprised the market by showing record compliance with oil-output curbs, and could improve in coming months as the biggest laggards – the United Arab Emirates and Iraq – pledge to catch up quickly with their targets.
Under the deal, Opec agreed to curb output by about 1.2 million barrels per day (bpd) from Jan 1, the first cut in eight years.
In addition, 11 non-Opec oil producers have promised to cut their output – Russia reduced production by 124,000 barrels per day this month compared with October levels, Interfax reported on Tuesday citing a source familiar with the data.
Benchmarks Brent and West Texas Intermediate crude oil were trading several cents on either side of the previous day's close. By 0930 GMT (5.30pm Malaysia), Brent was 3 cents higher at US$55.96 (RM248) a barrel while the US benchmark was 3 cents lower at US$54.02.
Investors raised their bets on rising Brent and WTI crude oil prices to fresh highs, data from the InterContinental Exchange and the US Commodity Futures Trading Commission (CFTC) showed in recent days.
Meanwhile, passive investment funds were poised to shift an estimated US$2 billion from far-term to near-term crude futures over the next week; another sign that market players are expecting a rally.
But while prices have risen around US$10 a barrel since a low in November before the final Opec deal was struck, they have been trading in a narrow range so far this year, said analysts at PVM.
"The oil market has been moving sideways for the last two months and has been stuck in a range of about US$5 a barrel. This is even more pronounced in the past 6 weeks, during which this range has narrowed down to US$3/bbl basis Brent," PVM wrote.
"The guessing game is in full swing as which direction oil prices will break out of their current range. It is fair to say the voice of those who are expecting higher prices in the coming months is louder than that of their rivals," PVM said, but warning that "if current longs decide to run for the exit there will only be one way for oil prices to go".
Oil industry and Opec country sources told Reuters Saudi Arabia wanted crude prices to rise to US$60 a barrel this year, a level it saw as encouraging investments but not spurring a fresh surge in US shale production.
But a report from consultancy Rystad Energy issued earlier this month said the break-even price for US shale oil producers fell last year to an average US$35 per barrel.
US producers boosted crude production to over 9 million bpd during the week ended Feb 17 for the first time since April 2016, according to federal data.
US drillers added five oil rigs in the week to Feb 24, bringing the total count up to 602, the most since October 2015, energy services firm Baker Hughes said on Friday. — Reuters