Prices slip on Opec deal 'sticking points'

Oil prices slipped on Friday as some investors opted to cash out after Brent touched a 16-month high on Thursday, with optimism over this week's Opec-Russia accord on cutting output giving way to questions on the "sticking point" of implementing the deal.

International Brent crude oil futures were trading at $53.36 per barrel at 04:46 GMT, down 58 cents, or 1.08%, from their last close.

US West Texas Intermediate futures were at $50.70, down 36 cents, or 0.71%.

Brent and WTI futures had jumped more than 10% since Wednesday's agreement by Opec members and Russia to reduce crude production by a combined 1.5 million barrels per day.

Analysts are now focusing their attention on implementation of the deal, the first agreement since 2001 by the Organization of the Petroleum Exporting Countries (Opec) and Russia to co-ordinate production cuts.

"It looks achievable on the face of it, provided the parties to the latest production cut deal stick to their pledges, which has historically been somewhat of a sticking point," ANZ bank said on Friday.

BMI Research stated: "Compliance issues and a stronger-than-forecast revival from the U.S. shale sector represents the largest downside risk.”

It maintained its forecast for Brent crude at $55 a barrel in 2017 due to "ample stock levels and spare capacity within Opec".

Still, traders said the market remained broadly optimistic in the longer term about an accord designed to help bring the oil market back into balance.

Simon Flowers, chief analyst at Wood Mackenzie, said: "This deal is significant. It sends a very strong message to the market and it should help the market find a balance.”

Flowers forecasts Brent to average $55 to $60 a barrel in 2017, but cautioned this would "depend on Opec being very careful to meet the terms of the agreement".

Traders said price developments in crude futures over the coming days should provide evidence of the extent of the market's optimism for the deal.

Ric Spooner, chief market strategist at CMC Markets, said "WTI has arrived at the peaks from the middle of last year and again in October”, adding the next movements in the futures should provide insight into exactly how positively traders view this week's agreement.

In the days prior to Wednesday's deal, the market assigned a low probability that Opec would come to a meaningful agreement because of arguments between de facto leader Saudi Arabia and third-largest producer Iran.

However, that changed after Russian President Vladmir Putin played a crucial role in helping Opec set aside differences to forge the cartel's first deal with non-Opec Russia in 15 years.