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Oil up on widespread Opec deal compliance, US rig count rises
[NEW YORK] Oil prices rose on Friday after reports that Opec members delivered more than 90 per cent of the output cuts they pledged in a landmark deal that took effect in January.
Supply from the 11 members of the Organization of the Petroleum Exporting Countries with production targets under the deal fell to 29.92 million barrels per day, according to the average assessments of the six secondary sources Opec uses to monitor output, or 92 per cent compliance.
The International Energy Agency (IEA) - one of Opec's six sources - said the cuts in January equated to 90 per cent of the agreed reductions in output, far higher than the initial 60 per cent compliance with a 2009 Opec deal.
"Some producers, notably Saudi Arabia, (are) appearing to cut by more than required," the agency said in a report.
Global benchmark Brent crude settled up US$1.07, or 1.9 per cent, at US$56.70 a barrel. It touched a session high of US$56.88.
US West Texas Intermediate (WTI) crude futures settled up 86 US cents, or 1.6 per cent, at US$53.86 a barrel.
Another increase in US oil rigs limited gains in the afternoon. Drillers added eight oil rigs in the week to Feb 10, bringing the total count up to 591, the most since Oct 2015, energy services firm Baker Hughes Inc said.
"From a psychological viewpoint, a big number to close above would be US$54, and the rig count probably made that a little less likely," said Phil Flynn, analyst at Price Futures Group in Chicago, speaking about US crude.
Crude has benefited from recent strength in gasoline prices as a glut seems to be gradually eroding.
Gasoline futures rose 1.3 per cent on Friday to US$1.59 a gallon.
The IEA, which advises industrial nations on energy policy, said if current compliance levels hold, the global oil stocks overhang that has weighed on prices should fall by about 600,000 barrels per day (bpd) in the next six months.
The agency also raised global oil demand growth expectations for 2017 to 1.4 million bpd, up 100,000 bpd from its previous estimate.
Nevertheless, producers will probably have to extend the production cuts beyond six months if they want to achieve their goal of balancing the oil market.