Kuwait confirmed this week that it would comply with the cartel's production agreement starting January, easing concerns that it was planned to ramp up output significantly.
Other oil producers including Kuwait and Saudi Arabia have notified customers that they will cut from January.
"While the market will eventually need to see some evidence of an actual reduction in output, talk of production cuts and notices of lower allocations sent to refiners are sufficient to support market sentiment for now", Tim Evans, Citi Futures' energy futures specialist, said in a note.The prospect of lower production led USA bank Goldman Sachs to raise its WTI price forecast for the second quarter of 2017 to $57.50 per barrel from $55.However, there are doubts about the willingness of other OPEC members to reduce output.
For Brent, Goldman expects prices between $55 and $60 per barrel after the first half of 2017.
The Organization of the Petroleum Exporting Countries has agreed to reduce output by 1.2 million barrels per day (bpd) from January 1, its first such deal since 2008.
Tata patriarch to step down as chairman of Tata Trusts
Tata Trusts was instrumental in the sacking of Mistry on October 24. Cyrus Mistry and Farida Khambata have been exclued from the list. It could be someone non-Parsi and not a member of Tata family.
Novak said earlier that the companies which account for 90% of oil production in Russian Federation had confirmed their readiness to voluntarily cut their output in the first half of 2017 in proportion to their shares as compared to October 2016. Analysts believe the newly proposed cuts will support the market, provided that the countries stick to their respective deals. However, in the last months, all OPEC members have been expanding their production.
This shows that OPEC still has some power to influence market prices.
Already, the U.S. Energy Information Administration (EIA) has announced that shale production will end a five-month decline in January, marking just the second monthly rise in the last twelve months.
"The market is being moved by two major forces, the Opec and non-Opec agreements to cut supply are supportive while the strength of the United States dollar will limit how high prices can go". Non-OPEC producers agreed to cut 558,000 barrels a day for the first six months of 2017. These cuts are expected to continue into 2017 with another two hundred thousand barrels a day forecast to be curbed.
I leave it as an exercise for the reader to figure out what would happen to the price if all oil producers (including, but not limited to OPEC) would decide to aim for such a reduction until 2020.