Crude oil edged higher on Tuesday, underpinned by high compliance with OPEC’s production cuts even as the market remains anchored by rising U.S. production.
The Organization of the Petroleum Exporting Countries (OPEC) has so far surprised the market by showing record compliance with oil-output curbs, and could improve in coming months as the biggest laggards – the United Arab Emirates and Iraq – pledge to catch up quickly with their targets.
“With the prospect of OPEC extending the current cuts even longer, we would expect to see prices continue to push higher from here,” ANZ said in a note.
The benchmark Brent crude oil LCOc1 added 0.2 percent to $56.03 a barrel by 0736 GMT, while West Texas Intermediate crude oil CLc1 was little changed at $54.06 a barrel.
For the month, U.S. crude oil is up 2.4 percent after falling in January, while Brent oil has risen marginally.
Under the deal, OPEC agreed to curb output by about 1.2 million barrels per day (bpd) from Jan. 1, the first cut in eight years. Russia and 10 other non-OPEC producers agreed to cut around half as much.