By Nigar Abbasova
World oil prices were up on January 4 supported by forecasts on tighter output, while top exporter Saudi Arabia is expected to raise prices for its crude as part of planned supply cuts.
International Brent crude futures were 32 cents or 0.6 percent up and stood at $55.79 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were trading at $52.65 per barrel, recording an increase of some 32 cents, or 0.6 percent from the last settlement.
The prices edged up after a long-anticipated joint output reduction deal between OPEC and some players outside the cartel got the floor on January 1, 2017, strengthening the expectation that reaching a balance is just around the corner.
The gains are due to expectations on reduced supply as major producers plan to put ceiling on output levels from this month in an effort to end a global oil glut, which resulted in a giant drop in crude prices.
One of the most supportive signs came from OPEC de-facto leader Saudi Arabia, which is expected to raise the official selling price (OSP) for all its crude grades to Asia in February, while the step is believed to potentially reflect a tightening market. OSPs for crude delivered to customers around the world are deemed to be a key indicator in determining the prices for crude futures like Brent or WTI.
Also, non-OPEC Oman told customers last week that it would cut its crude oil term allocation volumes by 5 percent in March.
The joint measure, which was under discussion for over a year before implemented, is expected to curtail production by almost 1.8 million barrels per day (bpd) and set the prices at the ranging level of $55-60.
While markets are highly optimistic about rising oil prices, futures are being dragged down by a strong U.S.-dollar, which makes it more expensive for countries to import dollar-traded fuel.
The greenback earlier hit a 14-year high against a basket of currencies on the back of strong U.S. economic data and dragged both contracts down from their highest since July 2015 levels.