SINGAPORE/SEOUL Asian crude oil buyers remained cautious, eyeing details of an OPEC deal after the oil-producers group agreed for the first time since 2008 to reduce output in an oversupplied market.
Global oil prices LCOc1CLc1 held onto gains on Thursday after soaring 6 percent in the previous session as the Organization of the Petroleum Exporting Countries agreed on Wednesday to reduce output to a range of 32.5-33.0 million barrels per day.
However, how much each country will produce is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.
"We have to wait and see whether they will take real action and how long it would last," said Kim Woo-kyung, spokeswoman at SK Innovation, owner of South Korea's largest refiner.
The size of the proposed cut is not significantly huge, she said, but added that the deal could support prices, increase the value of refiners' crude inventories and margins by pushing up oil product prices.
OPEC's new target represents an implied cut of 0.5-1.0 million bpd, although the actual cut could easily be much smaller at 0-0.5 million bpd depending on whether Libya and Nigeria can recover from supply disruptions, Societe Generale's oil analyst Michael Wittner said.
The OPEC deal is unlikely to affect Middle East crude supplies to term customers in Asia for next year, but may crimp additional volumes that producers have been offering throughout 2016, traders said.
"They've been giving incremental volumes so maybe less for next year," said a trader with a North Asian refiner who declined to be named as he was not authorised to speak to media.
Still, robust oil demand in Asia has absorbed much of the increase in OPEC production and may provide little impetus for OPEC producers to cut output unless demand drops.
"It has historically taken a fall in oil demand to ensure quota compliance, as in that case, production is forced lower by a decline in refinery intake around the world. This is not the case today with resilient demand growth," Goldman Sachs analysts said.
Asian refiners' crude demand has been good this year and are expected to hold steady unless there are major changes in refining margins or crude prices set by producers, the trader said.
Higher oil prices could also encourage U.S. shale producers to increase output and fill in supply gaps left by OPEC, traders said.
"An amply supplied market will continue to allow these importers to pick and choose from a broader array of suppliers, though given current refinery configurations the dependence on Middle Eastern crudes will continue," BMI Research analyst Peter Lee said.
(Reporting by Florence Tan in SINGAPORE and Jane Chung in SEOUL; Additional reporting by Keith Wallis in SINGAPORE; Editing by Michael Perry)