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Brent crude oil prices firm as Abu Dhabi cuts exports

Published 13/12/2016, 01:24 pm
© Reuters.  Brent crude oil prices firm as Abu Dhabi cuts exports
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By Henning Gloystein

SINGAPORE, Dec 13 (Reuters) - Oil prices were firm on Tuesday as the first signs of a crude production cut organised by OPEC and other exporters materialised, tightening a market that has been grappling with ballooning oversupply for over two years.

Brent crude futures LCOc1 , the international benchmark for oil prices, were trading at $55.76 per barrel at 0211 GMT, up 7 cents from their last settlement.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were weaker, down 7 cents at $52.76 a barrel, as American producers did not participate in the cut.

The firmer Brent prices came after oil markets shot to mid-2015 highs earlier this week after the Middle East-led Organization of Petroleum Exporting Countries (OPEC) and other exporters led by Russia over the weekend reached their first deal since 2001 to cut output by almost 1.8 million barrels per day to reduce in oversupply and prop up prices.

Analysts said that the announced cuts had surprised many as several OPEC members were previously reluctant to participate in the deal.

"The increasingly strong rhetoric from OPEC continues to spook investors, with shorts being forced to cover positions," ANZ bank said on Tuesday.

In a sign that producers are acting on their plans, Abu Dhabi National Oil Company (ADNOC) has told customers that it will cut crude supplies by 3-5 percent across its three export grades, two sources with knowledge of the matter said on Tuesday.

The producer from the United Arab Emirates will reduce Murban and Upper Zakum crude supplies by 5 percent and will cut Das crude exports by 3 percent, it said in a notice to term lifters. move is among the first visible indicators that oil markets will be physically tighter next year.

ADNOC's supply cuts will mostly hit Asia, although refiners there said that the cuts fell within contractual allowances under which ADNOC can alter agreed monthly supply volumes.

UAE crudes tend to be medium grade qualities in terms of density (heavy or light) and sulphur content (sweet or sour).

Murban is the UAE's main onshore crude oil and is relatively light. Besides state-controlled ADNOC, France's Total TOTF.PA , South Korea's GS Energy and Korea National Oil Corporation (KNOC), and the Japan Oil Development Company (Jodco) are partners in producing Murban crude.

The UAE's main offshore oils are Upper Zakum and Das crude.

Upper Zakum, owned to 28 percent by U.S. oil major ExxonMobil XOM.N , and 12 percent Jodco, is a medium grade crude.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC: OPEC's market share struggle

http://tmsnrt.rs/2cWq5NN GRAPHIC: OPEC's dwindling spare capacity

http://tmsnrt.rs/2g7oeps

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