Brent crude and West Texas Intermediate crude oil prices lift as Iraq indicates it will cut production and US stockpiles fall

 
Francesca Washtell
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Oil Prices Hit Highest Price In Almost A Year
US crude inventories have moved the market in recent weeks (Source: Getty)

Oil prices were lifted this evening after Iraq signalled it is willing to "shoulder responsibility" for part of Opec's planned production cut and data showed US crude inventories declined by 1.3m barrels.

Iraq, a key member of the 14-member consortium, had previously called for it to be exempt from efforts to strike a final slash to output next Wednesday when the group meets in Vienna. Baghdad has claimed oil revenues are needed to fight Islamic State.

However, today Prime Minister Haider al-Abadi told reporters the country is willing to trim its output and join Opec's plan to reduce global supply and, in turn, boost ailing prices.

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"Our priority is to raise the price of a barrel of crude," Abadi said.

Iraq's acquiescence to a deal will be a major coup for the organisation, which is poised to hash out an agreement to a four or 4.5 per cent output cut for all of the consortium’s members, except Libya and Nigeria. If successful, it will be the first such agreement for eight years.

Sign-off will still be needed from Iran and non-Opec member Russia, which the consortium has been trying to lure into a deal.

Brent crude lifted almost one per cent to $49.50 a barrel, before sliding back to $49.11 in early evening London time. US sweet crude lifted more than one per cent to $48.43, before slipping back to $48.18 a barrel.

Read more: Oil moves higher despite dollar strength as Putin raises Opec cut hopes

The brief uplift was also driven by figures from the US Energy Information Administration, which reported a 1.3m barrel decline in crude oil stocks in the week to 18 November.

Yesterday, data from the American Petroleum Institute showed a 2.68m barrel build in inventories, surpassing estimates of a modest 900,000 barrel increase.

What is Opec deciding?
On 30 November, the 14-member consortium will attempt to hash out a final agreement that finalises the commitments made in the Algiers Accord, reached at the end of September, to tackle the global supply glut that depressing prices.
In the provisional agreement, Opec members agreed to cut production to between 32.5m and 33m barrels per day (bpd). The group's level of production in October was 33.8m bpd, meaning it will need to cut production by over 1m bpd if it opts for the lower end of the indicated range.