December 9, 2019 / 12:01 PM / 2 months ago

Strong OPEC+ output compliance could push oil to $70 by second quarter - BofA

FILE PHOTO: The logo of the Organisation of the Petroleum Exporting Countries (OPEC) sits outside its headquarters ahead of the OPEC and NON-OPEC meeting, Austria December 6, 2019. REUTERS/Leonhard Foeger

(Reuters) - Strong compliance by OPEC and its allies with a deal to curb oil production and positive economic developments, including a U.S.-China trade deal, could push Brent to $70 a barrel LCOc1 before the second quarter of 2020, BofA Merrill Lynch said.

Oil producers led by Saudi Arabia and Russia, part of a group known as OPEC+, agreed last week to cut output by an extra 500,000 barrels a day in the first quarter of 2020 but stopped short of pledging action beyond March.

“Iraq remains a key focal point for OPEC+ critics,” the bank said in a note dated Dec. 6, saying Iraq’s output averaged more than 200,000 barrels per day (bpd) over previous quotas in 2019 and the latest deal would cut their quota by another 50,000 bpd.

“Based on historical precedent, we remain sceptical that countries like Iraq will deliver on their cuts,” it said.

Brent futures LCOc1 were down 44 cents, or 0.7%, at $63.95 per barrel by 0935 GMT, after gaining about 3% last week on news that OPEC and its allies would deepen output cuts.

Reporting by Diptendu Lahiri in Bengaluru; Editing by Edmund Blair

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