Oil prices were steady on Friday as the start of supply cuts by Saudi Arabia and Abu Dhabi supported the market, but doubts that all producers will implement output reductions agreed in a landmark deal last year kept markets from rising further.
Brent crude futures, the benchmark for international oil prices, were trading at $56.85 per barrel at 0238 GMT, down 4 cents from their close the previous day.
In the United States, West Texas Intermediate (WTI) crude futures were at $53.74 a barrel, two cents below their last settlement.
Thursday’s prices rose following reports of supply cuts from Saudi Arabia and Abu Dhabi coming into effect as part of efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers to curb a global supply glut.
Overall supply from OPEC in December fell slightly to 34.18 million barrels per day (bpd) from a revised 34.38 million bpd in November, according to a Reuters survey this week based on shipping data and information from industry sources.
While traders said oil markets were well supported by the agreed cuts, they said doubts remained that all producers would fully implement planned reductions.
“There will be some countries who will cheat…We expect zero compliance from Baghdad,” consultancy Energy Aspects said in its 2017 oil market outlook, published this week, highlighting doubts about Iraq’s contribution. “We definitely do not expect the Kurds to join in, given that they are autonomous from the federal government.”
Analysts said there was also some near-term downward pressure from technical indicators.
“Brent oil may approach a support at $55.43 per barrel, following its failure to break a resistance at $57.50,” said Reuters technical commodity analyst Wang Tao.
“U.S. oil may drop towards a support at $52.16 per barrel,” he added.