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UPDATE 8-Oil rallies in thin trade, adds to year's gains

Published 28/12/2016, 07:41 am
© Reuters.  UPDATE 8-Oil rallies in thin trade, adds to year's gains
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* OPEC, non-OPEC supply cut takes effect on Sunday

* Producer monitoring committee may meet on Jan. 13-sources

* Russia's Gazprom (MCX:GAZP) Neft trims planned 2017 oil-output rise

* Heating oil, gasoline contracts outpace oil in trading (Updates to close of trading, changes dateline, byline, prices)

By David Gaffen

NEW YORK, Dec 27 (Reuters) - Oil gained 1.5 percent Tuesday, continuing its year-end rally with support from expectations of tighter supply once the first output cut deal between OPEC and non-OPEC producers in 15 years takes effect on Sunday.

U.S. crude prices have surged 25 percent since mid-November, helped by expectations for OPEC's supply cut and generally solid U.S. economic figures that have also bolstered equity prices.

Trading was thin on Tuesday as just 257,000 front-month futures contracts traded, less than one-half of the usual volume in West Texas Intermediate crude futures. With oil near $54 a barrel, U.S. crude is not far from the year's high of $54.51 high reached on December 12.

"Some of the doubts (in OPEC) people are showing are going to have to be put to rest," said Phil Flynn, analyst at Price Futures Group in Chicago. "There's a strong possibility that we're going to rally into the end of the year."

Jan. 1 is the official start of the deal agreed by the Organization of Petroleum Exporting Countries and several non-OPEC producers to lower production by almost 1.8 million barrels per day (bpd). crude CLc1 settled up 88 cents, or 1.7 percent, to $53.90 a barrel. Brent crude LCOc1 settled up 93 cents, or 1.7 percent, to $56.09 a barrel. The global benchmark hit $57.89 on Dec. 12, highest since July 2015.

The members of an OPEC and non-OPEC committee formed to monitor the market may meet on Jan. 13, two sources said. Oil rallied further after news of the meeting, which may give an early indication of compliance with the deal. January, we'll start to have a better idea about the level of OPEC production," said Olivier Jakob, oil analyst at Petromatrix.

Russian oil producer Gazprom Neft SIBN.MM said on Tuesday it planned to increase oil production by 4.5 to 5 percent next year, less than intended before Russia joined the supply cut deal. OPEC members such as Saudi Arabia and Iraq have informed customers of lower supplies. But Libya and Nigeria - which are exempt from reductions because conflict has curbed their output - have been increasing production. markets outpaced crude on Tuesday, as the price of reformulated blendstock gasoline 1RBc1 gained 1.8 percent to $1.6555 a gallon, while heating oil HOc1 gained 2.3 percent to trade at $1.7002 a gallon. Those contracts expire Friday; options on those contracts are expiring Tuesday.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ TECHNICALS: U.S. oil may rise to $58.76 in three months

TECHNICALS: Intraday targets, key levels for oil, metals and oilseed

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