PRICE UP: CONFIRMATION OF THE TREND

Oil prices rose to $54 a barrel on Thursday, January 5 2017. Light, sweet crude for February delivery gained 50 cents, or 0.9%, to $53.76 a barrel on the New York Mercantile Exchange, and Brent, the global benchmark, settled at $56.89 a barrel.

Oil prices have jumped to 18-month highs since late November, after the Organization of the Petroleum Exporting Countries and 11 major oil-producing nations outside OPEC agreed to slash their collective production starting this month.

There is still skepticism on OPEC ‘capacity to control the oil producers but this time, the cartel has set up a monitoring committee to keep producers in check. The group is reportedly holding a two-day meeting Jan. 21-22 to assess the compliance situation So far everything seems to work.

The market is going to wait and see how well the OPEC and non-OPEC members comply but as we predict if OPEC confirmed we should expect another leap toward $65. End of January could be closer to $60 are saying a few analysts.

Saudi Arabia, the world’s largest exporter, has cut its production by the agreed 486,000 barrels a day, according to a person familiar with the kingdom’s output, reported Reuters.

We need to be watching for signs that U.S. production is picking up with higher prices. U.S. shale firms should respond quickly to price increases. Oil rig counts have been rising since last summer, indicating drilling activity has increased and should lead to higher output but the figures are not out yet so end of January close to $60 seems a good bet…