Oil prices edged up on Friday (January 13), supported by reports on details of OPEC output cuts, although lingering doubts over producer compliance with supply reduction targets weighed on the market.
Record Chinese oil imports of 8.56 million barrels per day (bpd) in December helped buoy prices, with shipments expected to continue rising in 2017, traders said.
Brent crude futures LCOc1, the international benchmark for oil prices, were trading at $56.09 per barrel at 0352 GMT, up 8 cents from their last close.
U.S. West Texas Intermediate (WTI) CLc1 crude futures were up 10 cents at $53.11 per barrel.
Traders said markets were bolstered by comments from top crude exporter Saudi Arabia that its output had fallen below 10 million bpd, levels last seen in early 2015, bolstered markets.
That would mean that the kingdom has cut production by more than the 486,000 bpd it agreed to under a deal to stem a fall in oil prices.
However, hard evidence of export reductions has yet to emerge two weeks into January, when the cuts by the Organisation of Petroleum Exporting Countries (OPEC) and other producers like Russia were supposed to start.
"The direction of prices will depend greatly on producer compliance with pledged supply cuts made in 2016," said French bank BNP Paribas.
"Any slip in the market's confidence that producers will follow through on their promises may lead to sharp price corrections," it added.
BNP said that it expected WTI prices to average $56 per barrel in 2017, up $7 from its previous forecast, and Brent to average $58 per barrel, up $8 from its earlier estimate.
The U.S. Energy Information Administration said in its January outlook that it forecasts Brent and WTI to average $53 per barrel and $52 per barrel respectively in 2017.
Dutch bank ABN Amro said that "conflicting signals" would likely keep oil prices trading in narrow ranges during the first half of the year.
The recent agreement between members of OPEC and non-OPEC producers to cut output had left many in doubt over their resolve, the bank said.
"This means that the oil price could advance further if the targeted cuts are actually achieved," ABN Amro said, but added that rising U.S. shale output and rising supply from OPEC members Nigeria and Libya, which were exempt from the pact, might offset any reductions.
An informal Reuters survey of over 1,000 energy market professionals showed that Brent prices in 2017 are expected to average around $55-60 per barrel.
