Oil prices jumped in early trading Monday because of the weekend agreement by the Organization of Petroleum Exporting Countries to reduce production later in the year, but they soon fell victim to profit taking and closed only slightly above Friday’s levels.
The August contract on the New York Mercantile Exchange ended the day 11 cents higher at $20.35 a barrel, after trading as high as $20.70 early in the session.
Part of the easing was also attributed to the buying of crude oil contracts for the winter period while selling current contracts.
OPEC ministers meeting in Vienna decided to reduce their planned production in the fourth quarter to 16.6 million barrels a day, the same as the third quarter, from the originally planned 18.3 million barrels. Oil demand usually rises in the winter. The cartel also agreed to keep a target price of $18 a barrel.
The rally began Friday when signs of an agreement became clear. The August contract posted a 60-cent rise when trading ended for the week.
On the spot oil market, prices were also higher early in the day.
North Sea crude oil prices were quoted Monday at nearly $20 a barrel, up 80 to 85 cents from Thursday when the Vienna talks began. Late in the day, however, Brent was quoted at $19.10 a barrel, up just 5 cents from Friday.
West Texas Intermediate, the benchmark U.S. oil, was at $20.35 a barrel, up from $20.30 on Friday.
Norway, West Europe’s second-biggest producer but not an OPEC member, said Monday that it will continue to curb its output to help OPEC keep the market tight and support prices. Norway’s decision had depended on a credible OPEC package.