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Oil prices have slipped after recording a second day of gains on Thursday during trading in the U.S. WTI for February delivery gained 0.9% to $53.76 a barrel following a U.S. Energy Information Administration report that crude stockpiles for the week ending December 30th had declined by 7.1 million barrels.
However, into Friday’s Asian session prices slipped back. As markets opened in the UK Brent crude futures were down 13 cents a barrel on their previous close, to $56.76 and WTI futures were at $53.65. On the question of how tightly OPEC oil exporters will comply to agreed cuts, reports were circulating that Saudi Arabia and Abu Dhabi were already putting cuts into effect. On the other hand Iraq was claiming that its autonomous Kurdish region was increasing output in defiance of its quota. There are plenty of doubts around the commitment of the entirety of Iraq to the deal, not only its autonomous Kurdish region.
Oil analyst Virendra Chauhan of Singaporean firm Energy Aspects was quoted by Reuters as saying:
“There will be some countries who will cheat…We expect zero compliance from Baghdad… And we definitely do not expect the Kurds to join in, given that they are autonomous from the federal government.”
Reuters also quoted a BMI Research speculation that Iraq may cooperate with neighbour Iran to bypass quotas by moving oil through Tehran. Iran is thought to be likely to be around 100,000 barrels a day below its own output quota and could help Iraq lighten its 210,000 bpd cut promise by selling 100,000 bpd of Iraqi oil out of Iran.
Base metals are mainly slightly lower this morning, with an average retreat of 0.2% for the complex. Nickel and zinc are both down around 0.6% though copper and aluminium prices are flat.
