ALSO READBrent crude oil prices surge to nearly $52/bbl after OPEC agrees output cut Oil prices fall on concerns over OPEC-Russia production deal and profit taking Oil prices surge, smash trading volume records as OPEC and Russia agree output cut Oil prices dip after OPEC-Russia output cut deal, focus swings to implementation Oil prices surge, trading volume records smashed as OPEC and Russia agree output cut
By Roslan Khasawneh
SINGAPORE (Reuters) - Oil prices dipped on Friday on concerns whether major producers would implement an OPEC-Russia deal to reduce production, compounded by data showing output in Russia rose to a post-Soviet high ahead of the announced cutback.
The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil production giant Russia this week said they would cut crude output early next year in order to rein in global oversupply that has dogged markets for over two years.
But front-month Brent crude futures were down 16 cents, or 0.3 percent, from their last settlement at $53.78 per barrel at 0836 GMT on Friday, as doubts emerged over the viability of the announced cut.
U.S. West Texas Intermediate (WTI) futures were at $51.06, flat with their last close.
Traders said prices were weighed down by concerns over the implementation of the deal under which OPEC members were joined by non-OPEC Russia for the first time in 15 years in announcing coordinated production cuts by a combined 1.5 million barrels per day.
Russia said on Friday that its output in November rose slightly to 11.21 million barrels per day, a fresh post-Soviet high.
As part of the OPEC-deal, Russia has promised to gradually cut its crude output by up to 300,000 barrels per day in the first half of 2017.
With cuts only being implemented next year against end of 2016 levels, analysts said there was still a possibility that oversupply, which has halved oil prices since 2014, remains in place next year.
"Let us put OPEC's decision into perspective: oil has just risen above $50 per barrel. Five months ago it was at similar levels, as indeed it was one month ago," said analysts at AB Bernstein on Friday.
"More important is the sentiment: does this mean oil will now rise sustainably above $60 and start its long-awaited rebalancing? It is possible, but far from certain," the analysts added.
Despite Friday's falls, traders and analysts said the deal was significant, and that it would at least reduce oversupply.
"This deal is significant. It sends a very strong message to the market and it should help the market find a balance," said Simon Flowers, chief analyst at Wood Mackenzie.
Flowers forecasts Brent to average $55-$60 a barrel in 2017, but cautioned this would "depend on OPEC being very careful to meet the terms of the agreement".
(Additional reporting by Henning Gloystein; Editing by Michael Perry and Kenneth Maxwell)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)