NEW YORK (DTN) -- New York Mercantile Exchange oil futures were little changed at settlement Monday afternoon amid overbought market conditions, with the 2017 supply outlook unclear as the market questions whether major oil producers will deliver on their agreement to cut output starting next month.
The Organization of the Petroleum Exporting Countries and 11 non-OPEC oil producing countries have agreed to cut their production by a combined 1.758 million barrels per day (bpd) in hopes of rebalancing global supply and demand in 2017.
Kuwait, Saudi Arabia and non-OPEC member Russia last week promised to comply with the agreements, which were signed on Nov. 30 and Dec. 10, respectively. Saudi Arabia has said they could even cut more than the 486,000 bpd they had initially agreed to.
While exempt from the Nov. 30 supply deal, Libya said over the weekend that it will defer restarting production at its Sahara and el Feel oilfields amid militant threats. Libyan output has been producing below capacity in recent years due to security problems.
Militants last week threatened more attacks on oilfields and export terminals if the Libyan government tries to increase production. The Libyan situation supported the oil complex during overnight trade before the market reversed slightly lower this morning.
In afternoon trade, oil futures were lent upside support on news Russia's ambassador to Turkey Andrei Karlov was shot dead at a photo exhibit in Turkey where he was speaking by a gunman who indicated the ongoing civil war in Syria as motive. Moscow called the attack an act of terror, with Russia deeply involved in the Syrian war on the side of President Assad.
"That report of an attack on Russian ambassador got us a bounce for crude," said analyst Phil Flynn at Price Futures. "Other than that, there wasn't much... We were waiting for EIA data [due] out on Wednesday and for OPEC to comply with their agreement."
Flynn noted trade volume was light ahead of the upcoming holiday season, with some traders book-squaring ahead of end year, and in front of the expiration by the January WTI futures contract on Tuesday, Dec. 20, afternoon.
At settlement, NYMEX January West Texas Intermediate futures were 22 cents higher at $52.12 per barrel (bbl) while February contract was up 11 cents at $53.06. ICE February Brent crude futures eased 29 cents to $54.92 bbl. The NYMEX ULSD futures contract nudged down 0.33 cent to $1.6690 gallon and January RBOB futures edged up 0.68 cent to $1.5639 gallon.
George Orwel can be reached at firstname.lastname@example.org
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