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Oil Rises after First Month of OPEC Cuts

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How Quickly Could U.S. Producers Offset OPEC-Led Production Cuts?

Feb 2 US oil fell on Thursday after official data showed USA crude and gasoline stockpiles rose sharply, although signs that OPEC and other producers are holding the line on output cuts are helping support prices.

The price of April futures for Brent crude oil rose by 0.50 percent and stood at $56.84 per barrel as of 01:34 EST. On the New York Mercantile Exchange, West Texas Intermediate futures gained 0.2% to trade at $52.92 a barrel.

Both Brent crude and WTI prices fell on Thursday after official data showed that USA stockpiles rose by 6.5 million barrels.

A Reuters survey this week put compliance with the OPEC production agreement at 82 per cent, with January output cut by more than one million bpd in January.

Despite the more-than-planned cut in oil production, Russian Federation is expected to quickly roll out output to new post-Soviet record highs once the deal runs its course in June 2017. That brought the total count to 566, the most since November 2015.

How Quickly Could U.S. Producers Offset OPEC-Led Production Cuts?
Oil Firms on Signs of OPEC Cuts

Russian Federation cut production in January by around 100,000 barrels per day (bpd), according to data seen by Reuters.

Trading of Brent crude had not started. PVM Oil Associates noted the market "is sandwiched between supportive OPEC-led output cuts and the bearish impact of a resurgence in US crude production".

The International Energy Agency's Neil Atkinson said in an interview with US network CNBC that he believes hopes for oil prices gaining to $63-$65 a barrel is probably unrealistic in the near term.

All told, OPEC's output is 550,000 bpd above its target, meaning it is only 60 percent towards reaching the 1.8 million bpd objective - which in itself has been criticized by analysts for being far too little to shrink global oversupply and trigger meaningful market stabilization. Tension between the United States and Tehran is also rising after Iran tested a ballistic missile, raising the possibility of future sanctions that could curb Iranian oil supply. They rose $1.07 to close at $53.88 the day before.

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