Oil started the first week of 2017 with a bang but ended it with a whimper, as the Opec fireworks that dominated the last quarter gave way to the more mundane reality of monitoring if the cartel will make good on its pledged cuts. Brent crude oil briefly touched an 18-month high above $58 a barrel on the first day of trading but there was little fresh buying by funds that had already propelled prices higher by more than 30 per cent in the last six weeks of 2016, as Opec moved to agree the first supply curbs since 2008. “The Opec and non-Opec cuts agreed at the end of last year have helped changed the underlying sentiment of the market, but for now oil is moving into a holding pattern,” said Michael Tran, director of global energy strategy at RBC Capital Markets.
“The market is now looking for evidence of compliance. The recovery could be slower and steadier from here.” By Friday prices for were on course to finish down slightly on the week, trading around $56.75 a barrel, with traders cautious about how much further prices can climb, with the market still oversupplied. After hitting a 13-year low below $30 a barrel in early 2016, Brent eventually recovered by about 50 per cent over 12 months of volatile trading.