Oil closes at 17-month high as OPEC cut seen balancing market

Oil rose to a 17-month high as the market shifted focus from output cuts by Organisation of Petroleum Exporting Countries (OPEC) and other nations to the global supply balance in 2017. Futures rose 0.3 per cent in New York after surging 2.6 per cent Monday when Saudi Arabia signalled it may cut more than initially agreed and 11 non-OPEC producers also committed to a reduction. That prompted the International Energy Agency to predict US shale output will rise next year, while the oil glut will disappear and global markets will become under- supplied in the first half of 2017. Investors boosted bullish crude bets in the run up to the November 30 deal. "These cuts move the market from surplus into deficit," Andrew Slaughter, executive director at the Deloitte Center for Energy Solutions in Houston, said by telephone. "These cuts will eat into the inventory overhang. How fast this happens depends on how much of a cut OPEC delivers." Oil has risen about 17 percent since OPEC agreed Nov. 30 to trim output for the first time in eight years. The subsequent deal reached last weekend with non-members encompasses countries that produce about 60 per cent of the world’s crude. The price rally has led to predictions of a production revival in the US, where shale output from seven fields may increase next month, a report showed. (Mark Shenk/Bloomberg)