Oil prices bounce after OPEC reaffirms plan to cut output

Oil prices rose by over 1 percent on Monday, pushed up by a statement from the producers’ club OPEC that it was committed to a deal made in September to cut output in order to prop up the market.Brent crude LCOc1 was at $46.12 per barrel at 0746 GMT, up 54 cents, or 1.18 percent, from their previous close.U.S. West Texas Intermediate (WTI) crude CLc1 was up 61 cents, or 1.38 percent, at $44.68 a barrel.The Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC) said on Monday the group was committed to a deal made in Algiers to cut output.“We as OPEC we remain committed to the Algiers accord that we … put together. All OPEC 14 we remain committed to the implementation,” Mohammed Barkindo told reporters at a conference in Abu Dhabi.Despite this, many analysts doubt that OPEC’s ability to coordinate a cut.“Skepticism about the ability for OPEC to execute on its Algiers agreement is warranted … (but) OPEC can still spook markets with its rhetoric,” Morgan Stanley said.“If prices continue to slip, the chances for bullish OPEC headlines grow, which could lift prices briefly even if there is no follow through,” the U.S. bank added.Barclays bank said there was little to no agreement among producers about who would cut how much.“Individual country details still remain challenging to agree upon,” Barclays bank said.“Iraq boosted production while Saudi Arabia asked for exceptions. Russia is still sitting on the sidelines, and none of the non-OPEC members consulted thus far has expressed any intention of a cut,” it said.Monday’s price rises come after steep falls last week, when by Friday Brent fell as low as $45.08, its weakest since Aug. 11. WTI hit $43.57 on Friday, its lowest since Sept. 20.Last week’s losses were the steepest since January, and took nearly 15 percent off a one-year high hit in the first half of October.There are also risks that the oil glut, which has dogged markets for over two years, could continue as OPEC’s de-facto leader Saudi Arabia threatened to increase production should the upcoming meeting between lead to no result.Even if Saudi Arabia does not follow through on that threat, its exports could rise.“Saudi local oil demand is falling, and just maintaining current output could imply higher exports,” Barclays said.There were also signs of rising future U.S. output as the number of drilling rigs looking for new oil to produce rose by 9 to 450 in the week to Nov. 4, the highest level since February.