By Julia Payne
LONDON (Reuters) - Oil prices rose on Tuesday, supported by a falling U.S. dollar and Saudi Arabia saying it would adhere to OPEC's commitment to cut output.
The dollar fell by 0.6 percent against a basket of currencies on Tuesday after U.S. President-elect Donald Trump said that the strong greenback was hurting U.S. competitiveness.
Brent crude futures, the international benchmark for oil prices, were up 76 cents at $56.52 a barrel by 1451 GMT, having risen earlier by more than $1 to a session high of $56.95 a barrel.
U.S. West Texas Intermediate (WTI) crude futures were up by 82 cents at $53.19 a barrel. The contract also rose more than $1 to a session high of $53.52 a barrel.
Also Read
"The rise is more or less related to the weaker dollar, which has lifted most commodities today," said Carsten Fritsch, commodity analyst at Commerzbank.
Gains were capped by rising U.S. production and scepticism that the Organization of the Petroleum Exporting Countries as a whole would comply with its commitment to reduce supplies.
Traders said that oil drew some support from top crude exporter Saudi Arabia, which said it would adhere strictly to its commitment to cut output under the agreement between OPEC and other producers, such as Russia.
Under the agreement, OPEC, Russia and other non-OPEC producers have pledged to cut oil output by nearly 1.8 million barrels per day (bpd), initially for six months, to bring supplies back in line with consumption.
"The market genuinely seems quite happy here (with oil around $55) ... but people are watching with caution as the slightest hint of this OPEC/non-OPEC agreement going wrong is going to drive the market down," said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.
Despite this, crude futures have fallen by 5 percent since their early January peaks on doubts over producers' willingness to comply fully with the cuts.
Traders are also watching rising U.S. output, which could offset supply cuts elsewhere.
Further weighing on crude, at least in the short term, have been refinery outages in the Middle East and Asia over the past week, traders said.
Analysts also said that steps to prop up oil prices through a cut in supplies could be self-defeating.
"For each $10 per barrel increase in oil prices, oil demand will decline by 10 basis points. While consensus expects demand-growth of 1.3 million bpd in 2017 (vs 1.4 million bpd in 2016), we see risks to the downside as demand growth in China and India starts to moderate," AB Bernstein said.
(Additional reporting by Henning Gloystein in Singapore; Editing by David Goodman and Louise Heavens)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
