Commodities: Crude firms on hopes producers will abide by output cap

Crude-oil futures were higher on Thursday afternoon, propped by positive sentiment that producers of the black liquid would abide to an output cap.

At about 15:17 GMT, Nymex-quoted West Texas Intermediate was up 0.74% to $52.88 a barrel, while Intercontinental Exchange-listed Brent was up 0.77% to $54.88 a barrel.

The dollar-spot index was down 0.28% to $102.730.

"In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely," said SwissQuote in a research note.

"The commodity has weakened from resistance given at 54.51 (10/07/2015 high) towards 50. Expected to bounce back even higher," SwissQuote said.

FXTM chief market strategist Hussein Sayed commented earlier today that oil prices were fluctuating after a surprise increase in US crude inventories, according to Energy Information Administration, offset the previous report from American Petroleum Institute, which showed a drawdown of 4.15 million barrels.

"Although these reports used to play a major role in setting prices, the next six-month focus will shift to production numbers from OPEC and non-OPEC producers and whether they will deliver on their promises to cut production by more than 1.7 million barrel," said Sayed.

"The $50-$60 range is likely to remain intact for the foreseeable future until more stories develop on U.S. shale, global demand, and compliance with oil producer’s agreement," Sayed said.

Various reports suggested optimism afoot on the upcoming reports.

"It is a safe assumption particularly in the early stages that OPEC and non-OPEC producers will abide by the agreement to curb output," said Ric Spooner, chief market analyst at CMC Markets in Sydney, Reuters reported.

The news agency also quoted Kuwait's oil minister Essam Abdul Mohsen Al-Marzouq as commenting: "The announcements coming from Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Iraq, and Russia are all encouraging signs that they will abide by the cut and hopefully other countries will follow suit."

However, Norbert Ruecker, head of commodities research at Julius Baer, was sceptical that the "supply deal will have a material impact and provide lasting support to prices".

Meantime, on Comex, gold was up 0.08% to $1134.1 an ounce, with silver up 0.29% to $16.03 an ounce and copper ahead 0.34% to 250.55 cents a pound.

Three-month industrial metals on London Metals Exchange were mixed -- copper and aluminium were mildly ahead, while zinc and tin were similarly lower.

Among agriculturals, Chicago Board of Trade-priced corn was down 0.36% to 346 cents a bushel, while wheat fell 0.19% to 398.75 cents a bushel.

ICE cocoa was down 2.5% to $2222 a MT, while cotton No.2 was up 0.21% to 70.28 cents a pound. Live cattle was up 0.19% to 116.45 cents a pound.