Oil pump jacks are seen next to a strawberry
field in Oxnard, California February 24, 2015.
Oil prices ended about 1 percent higher after
touching three-week highs on Tuesday on OPEC's
optimism for greater compliance with its deal
with other producers including Russia to curb
output in an effort to clear a glut that has
weighed on the market.
OPEC Secretary General Mohammad
Barkindo told an industry conference in London
that January data showed conformity from
participating OPEC nations with output curbs had
been above 90 percent and oil inventories would
decline further this year.
"All countries involved remain
resolute in the determination to achieve a
higher level of conformity," Barkindo said.
The Organization of the Petroleum
Exporting Countries and other producers outside
the group agreed in November to cut output by
about 1.8 million barrels per day (bpd) in an
effort to drain a glut that has depressed prices
for over two years.
Barkindo said it was too early to
say if the supply cut, which lasts for six
months from Jan. 1, would need to be extended or
deepened at the next OPEC meeting in May.
"While Barkindo's statement puts a
confident spin on market fundamentals, we'd say
questions do remain, given that Iran seems to be
signaling increased production rather than
improved compliance," Tim Evans, an energy
futures specialist at Citi Futures said in a
note.
Under the deal, Iran was allowed to
boost output from its October level and Tehran
expects its oil production to reach 4 million
barrels per day by mid-April.
Iranian Oil Minister Zanganeh told
state TV that OPEC and non-OPEC oil producers
are committed to the production cut.
Brent crude LCOc1 ended the session
at $56.66 a barrel, up 48 cents or 0.9 percent,
after hitting its highest since Feb. 2 at
$57.31.
The U.S. March crude contract CLc1
expired 66 cents, or 1.2 percent, higher at
$54.06, after peaking at $54.68, its highest
since Jan. 3.
The more active U.S. crude for April
delivery CLJ7 closed the session up 1 percent at
$54.33.
U.S. gasoline futures RBc1 were the
biggest drag on the energy complex, ending 1.5
percent lower at $1.4940 a gallon. That pushed
gasoline crack spreads RBc1-CLc1 , an indicator
of refining margins, to a fresh one-year low.
From a technical perspective, the
tight consolidation above last year's key broken
resistance levels suggests oil prices have been
coiling to break higher, said Fawad Razaqzada,
technical analyst for Forex.com.
"I am anticipating both oil
contracts to break out of their recent ranges
and head higher."
Since the OPEC deal in November,
crude prices have moved in a tight $5-band.
The OPEC cuts, however, have spurred
a speculative move into crude oil that has
pushed prices towards the top of their recent
ranges that might prompt a correction.
Money managers hold the highest
number of net long Brent and U.S. crude futures
and options on record, data showed on Monday and
Friday, betting on higher prices to come as OPEC
and other key exporters reduce production.
[O/ICE] [CFTC/]
"Should there come a time when these
speculative positions decide to unwind, oil
prices will be in for a significant correction,"
said Jonathan Chan, an investment analyst at
Phillip Futures.
Still, the Relative Strength Index
(RSI) in U.S. crude futures remained at about 58
on Tuesday, well below the overbought level of
70, Reuters data showed.
Bank of America Merrill Lynch cut
its forecast for Brent crude prices to an
average of $50-70 through 2022, from $55-$75
amid a recovery in U.S. shale production.
(Additional reporting by Christopher
Johnson in London and Aaron Sheldrick in Tokyo;
Editing by Marguerita Choy and Ruth Pitchford)
http://www.reuters.com/article/us-global-oil-idUSKBN16003J