Oil dips on doubts over touted production cuts

Oil dips on doubts over touted production cuts

An employee holds a gas pump at a petrol station in Sao Paulo, Brazil, November 8, 2016.  REUTERS/Paulo Whitaker

Oil prices dipped on Thursday on doubts producers would fully deliver on promises to cut output, although record U.S. automobile sales and falling crude stocks offered markets some support.

Brent crude futures, the international benchmark for oil prices, were trading at $56.28 per barrel at 0150 GMT (8.50 p.m. ET), down 18 cents from their last close, Reuters reports.

Traders said the decline came on the back of worries that plans by the Organization of the Petroleum Exporting Countries (OPEC) and other leading producers to cut crude supply would be fully implemented.

"There remains a question mark over whether OPEC, with a long history of non-compliance, will actually follow through (with the cuts). Very few respondents expect full compliance," Singapore Exchange (SGX) said on Thursday, citing results from a survey of its participants.

"Three quarters of those surveyed went for (crude) prices averaging within the current $50-60/barrel range (for 2017)," SGX added.

Reuters commodity analyst Wang Tao said that technical price trend indicators showed Brent may soon test support at $55.43 a barrel, although he added that the longer-term upward trend in crude prices that started in the second half of last year was still in place.

In the United States, crude prices were firmer than on international markets, supported by strong vehicle sales and a report of falling commercial crude stockpiles.

U.S. West Texas Intermediate (WTI) crude oil futures were trading down 10 cents at $53.16 per barrel.

Firmer prices for WTI than for Brent were supported by an American Petroleum Institute (API) report showing U.S. crude inventories fell 7.4 million barrels in the week ended Dec. 30 to 482.7 million, compared with analyst expectations for a decrease of 2.2 million barrels.