Dubai:

Assurances coming out from Abu Dhabi on last month’s Opec deal will keep prices supported for now, but the upside will be limited due to rising US shale.

On Friday, Brent prices fell 1 per cent to end at $55.45 (Dh203.67) per barrel, after losing more than 3 per cent in the week.

“We expect no major changes over the next couple of weeks, we assume that comments from producers will be supportive to the deal and for the prices,” Francisco Quintana, head of strategy at Foresight Advisors told Gulf News. He expects oil prices to be in the range of $53-$58 over the next few weeks.

Last week, officials from the oil producing Opec countries gave assurance that they were cutting production in line with the December Opec deal. That these cuts are happening is also evident from notices sent by these countries to their buyers informing them of the lower supply levels.

“Even if the compliance is partial, say if 90 per cent of the reduction is implemented, then the impact is the same: slow adjustment in the market, support to prices throughout the year,” Quintana said.

Analysts are expecting a clear picture to emerge in Opec’s monthly report to be released on February 13, which is expected to give a full picture of what Opec countries said it had been pumping compared with third-party estimates.

Shale rise

Analysts say rising rig counts in the US could keep the upside in oil prices limited.

Since crude prices first topped $50 a barrel in May after recovering from 13-year lows in February, drillers have added a total of 206 oil rigs in 29 of the past 33 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years starting in mid 2014.

However the risk of long liquidation of record long positions may been thwarted.

“Considering the ongoing efforts to rebalance the market, we do not see the risk of a major correction as has been seen several times in recent years when speculators got too carried away in either direction,” said Ole Hansen, head of commodity strategy, Saxo Bank.

In the week ending January 3, the combined net long position stood at 790 million barrels with the gross long staying above 900 million barrels.