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(Bloomberg) -- Oil climbed as Kazakhstan pledged to comply with OPEC+ production quotas and US crude stockpiles fell for the fourth straight week.
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West Texas Intermediate advanced about 1.5% to around $71 a barrel. Government figures released Wednesday showed US crude inventories shrank 934,000 barrels last week while exports rose 1.8 million barrels to the highest since July.
Oil jumped on reports that Kazakhstan intends to comply with OPEC+ quotas next year. The cartel member had earlier unsettled markets by signaling that it would adhere to its original plan of raising oil output by 190,000 barrels a day, according to Rebecca Babin, senior energy trader at CIBC Private Wealth Group, despite OPEC’s decision to delay production hikes.
Middle Eastern markets also have shown signs of tightness, with prices of several key grades rising, according to traders who deal with those barrels. The gain has helped to dramatically narrow the difference in price between the Asian Dubai benchmark and Brent.
Still,“the rally remains fragile, with broader macroeconomic factors continuing to dominate price movements,” Babin said. “The upcoming Federal Reserve statement and potential shifts in China’s economic policy are key factors that will likely shape the medium-term direction for crude prices.”
Crude has traded in a narrow band for the past two months, supported by geopolitical tensions in the Middle East and Europe, and the threat of further sanctions on supplies from Iran and Russia. Restraining prices are lackluster Chinese demand and expectations for robust production from non-OPEC+ nations such as the US, where President-elect Donald Trump has promised to encourage domestic development.
Investors are counting down to the Federal Reserve’s final policy decision of the year. While a quarter-point interest-rate cut is almost fully priced in for Wednesday, investors will focus on the outlook for 2025.
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