Oil heads for 2nd weekly gain as Opec cuts output

London - Oil headed for a second weekly increase as the Organisation of Petroleum Exporting Countries (Opec) and other producing nations maintained they would achieve their target of cutting production to reduce bloated global inventories and stabilize the market.

Front-month futures in New York are up 2.3% for the week, set for the biggest advance since December 2.

Opec and other producers are due to reach the 1.8 million-barrel-a-day reduction target next month, Algeria’s Energy Minister Noureddine Boutarfa said on Thursday.

Nations are likely to fully comply with the deal and the curbs will bring global crude markets into balance early this year, Kuwait’s oil minister said on Wednesday.

Last month’s pact between Opec and 11 other nations gave hope to a market stuck in a 2 1/2 year slump. While Saudi Arabia says more than 80% of the agreed cuts have been implemented, analysts and investors are still waiting for data to gauge the extent of the decrease.

The International Energy Agency says rising prices will spur US shale output, and drillers are adding more rigs.

"The market sentiment is positive so any bullish news is being used as buying opportunity while bearish news is being ignored," said  Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

"The litmus test will come next week with Opec production surveys. If these surveys fail to show a substantial drop, the optimism will be put to a test."

West Texas Intermediate for March delivery fell 15 cents to $53.63 a barrel on the New York Mercantile Exchange as of 9:22 in London.

Total volume traded was about 38% below the 100-day average. The contract gained $1.03 to $53.78 on Thursday.

Output cuts

Brent for March settlement dropped 28 cents to $55.96 a barrel on the London-based ICE Futures Europe exchange. The contract added 2.1% to close at $56.24 on Thursday.

The global benchmark crude traded at a premium of $2.32 to WTI.

A committee that was formed to monitor the production cuts will meet in Kuwait in mid-March, Boutarfa said in Algiers.

Some countries haven’t yet made the full output reduction, but they will increase curbs over the coming months and all are "highly committed" to the deal, Kuwait’s Oil Minister Essam Al-Marzouk said Wednesday.

Oil-market news:

US motorists probably would foot the bill for President Donald Trump’s 20% border-wall tax as domestic refiners reliant on Mexican crude pass on the cost.

Royal Dutch Shell is nearing an agreement to sell a package of UK North Sea exploration assets for about $3bn, according to people familiar with the matter.

An explosion occurred in a furnace at Tema Oil Refinery’s crude-distillation unit at about 10 am on Thursday, Accra-based newspaper Graphic reported, citing people it didn’t identify.

A slew of blazes at refineries across the globe is shrinking supplies and boosting profits from turning crude into products such as gasoline and diesel.