West Texas Intermediate crude oil futures for delivery in February were trading 0.7% higher at $51.14 per barrel during Wednesday’s pre-market trading session while Brent crude futures for delivery in March were up by 0.8% at $54.09 per barrel.
The pre-bell price gains come despite a higher dollar as the Organisation of Petroleum Exporting Countries’ (OPEC) landmark agreement to cut oil output is in effect. At the time of writing the Dollar Index, which tracks the value of the US currency against a basket of foreign currencies, was 0.37% higher. As a dollar-denominated commodity, a higher greenback tends to make oil less affordable to international buyers.
The gaining US currency comes as the countdown continues to the inauguration of America’s 45th president. President-elect Donald Trump is due to be sworn in on January 20th with a speech to be delivered then which is likely to yield key details of his planned economic policies and approach toward international relations.
OPEC members signed an accord on November 30 committing to lower oil output by more than 1 million barrels per day, collectively, from January 1st. The deal, the first of its kind in almost eight years, came after two years’ of overproduction of oil globally and resulting price erosion. A number of non-OPEC oil-producing nations, including Russia, followed suit, agreeing to lower production by more than half a million barrels per day effective from the same start date.