Brent crude oil prices rise to $49 on strong demand but pressure over Opec deal compliance remains

 
Courtney Goldsmith
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Chinese Laborers Work At An Oil Well In Hejian
Oil prices were bolstered by strong China demand (Source: Getty)

Oil prices climbed this morning due to strong demand, but pressure remains as another producer in the Organisation for the Petroleum Exporting Countries (Opec) has failed to comply with supply cuts.

Data from China yesterday showed refineries increased crude throughput in June to the second highest on record.

Brent crude futures reached $49 per barrel this afternoon, up 1.2 per cent. West Texas Intermediate (WTI), the US benchmark, traded 1.04 per cent higher at $46.50 per barrel.

Opec and non-Opec nations including Russia have agreed to cut production by around 1.8m barrels per day (bpd) until March 2018 in a bid to shore up oil prices and cut the global supply glut.

However, compliance with the cartel's cuts has slipped in recent weeks, and countries exempt from the deal - Libya and Nigeria - have ramped up output over the past few months.

Now Ecuador, a small Opec producer, has said it will start raising oil production this month.

Ecuador's oil minister, Carlos Perez, said the country will not cut its production by 26,000 bpd to 522,000 a day as agreed due to the Ecuador's fiscal deficit.

Analysts have previously signalled that Opec must surprise the market in order to raise oil prices substantially.

"We're stuck in a range that, I think, will be tough to break out of without some kind of political factor coming into play," Matt Stanley, fuel broker at Freight Investor Services, said, according to Reuters.

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