Oil prices open the week’s trading with another rally. Crude oil futures for the month of January climbed 27 cents higher or 0.5% to $52.16 a barrel in the Globex electronic session of the New York Mercantile Exchange, while Brent crude for February traded 0.3% higher or 19 cents, to $55.40 a barrel on the London ICE Futures exchange. US oil benchmark West Texas Intermediate rose 0.6% at $52.22.
The commodity experienced a rally with the opening on Monday due to a weaker dollar, losing 0.8 % against a basket of other currencies.
The greenback usually affects the pricing of the oil for any country that uses own currency domestically. Just last week, the US dollar reached its highest rate since 2002.
Nymex gasoline blendstock for the month of January climbed 115 points to $1.5686 per gallon, while diesel futures for January traded 139 point higher at $1.6862 a gallon. The gasoil prices changed from Friday’s previous trading price to a shift to $493.25 per metric ton, which rose by $3.00.
Meanwhile, the Organization of Petroleum Exporting Countries are monitoring that the production cuts starting January next week will be followed by all the members and non-members who agreed on the deal. The agreement was to cut oil production to 1.2 million barrels per day.
However, several analysts and economists are still quite wary whether the cut would be followed.
“We doubt that the OPEC-led cuts will reduce oil supply by as much as some are hoping. It is unlikely the cartel will implement the cuts in full, and that non-OPEC production will likely increase,” Capital Economics stated.
Previously, banking company Goldman Sachs expressed bearish sentiments on the pricing of crude oil, but recently, Goldman Sachs now seems to be bullish over the commodity following the production cuts.
According to Goldman Sachs, they expect Brent crude to reach around $60 per barrel by the end of the first half of 2017, while US oil may reach $57.50 per barrel.
Still, there are chances that oil prices might not reach the price surge that the OPEC is intending to achieve, especially with the fact that there are still several other oil-countries that are not included on the oil production cut agreement.
The United States was not part of the production cut and their drilling and production for oil has actually increased even more for the past seven straight weeks. Drilling companies have already added 12 oil rigs during the December 16 week, totaling to 510 rigs, which was the highest count since January.
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