Oil prices edge up in anticipation of tighter 2017 market

Oil prices inched up on Monday in anticipation of tighter crude supply going into 2017 following the decision by OPEC and other producers to cut output to prop up prices.

Brent crude futures, the international benchmark for oil prices, were trading at 55.41 dollars per barrel at 0043 GMT, up 20 cents, or 0.36 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures were up 22 cents, or 0.42 percent, at 52.12 dollars a barrel.

Traders said the higher prices in front-month crude futures were due to expectations of a tighter market from 2017.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia have announced cutbacks of almost 1.8 million barrels per day (bpd) in oil production from January 2017 in an effort to bolster prices .

It also wants to reduce rampant global overproduction which has  seen output outstrip consumption for over two years.

“With investors now expecting a relatively high level of compliance with the production cut agreements, prices should be well supported,” ANZ bank said on Monday.

“Some weakness in U.S. dollar also helped improve investor sentiment.”

The dollar has lost 0.8 per cent against a basket of other leading currencies since hitting 2002 highs last week.