OPEC is a market stabilizer

Ms. Yellen told the U.S. Senate Banking Committee the central bank will likely need to raise interest rates at an upcoming meeting, although she expressed caution about the considerable economic policy uncertainty under the Trump administration.

OPEC probably will extend the six-month deal if prices remain near or above current levels, Shum said. Many analysts say oil producers will have to cut production more quickly to drain the global oversupply this year.

The durability of the deal, then, may depend on how long Saudi Arabia, which has historically played the market's "swing producer" role to help keep the market balanced, will be amenable to covering for any members not hitting their target.

In January, OPEC total production fell by 890,000 barrels a day, with most of the cuts coming from oil giant Saudi Arabia. OPEC in January delivered record compliance of over 90 percent with its output curbs, according to estimates from the International Energy Agency and figures collected by OPEC's headquarters.

March crude fell 24 cents, or 0.5%, at $52.96 a barrel on the New York Mercantile Exchange. Total volume traded was about 7 percent below the 100-day average. US light crude traded at $52.94 a barrel following the inventory report by a trade group, after settling up 27 cents at $53.20.

The dollar reversed course after Ms. Yellen's comments and was up 0.3 per cent after touching a three-week high of 101.38 against a basket of major currencies. She gave no indication of the timing of the next hike in her prepared remarks.

Oil prices wavered between modest gains and losses Wednesday morning ahead of official data expected to show an increase in US crude stockpiles.

Also in the week ended February 10, Crude inventories rose 9.5 million barrels, which was more than the expectations of analysts.

Since Adam was a boy, Opec and (some) member country ministers have conjured up the bogeyman of speculators and money managers to explain away uncomfortable prices - high or low.

"They are waiting for the upturn", said Bjarne Schieldrop, chief commodities analyst at SEB Markets.

Eleven non-OPEC countries - Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan - agreed to reduce the oil output.

Since the beginning of the year, OPEC countries made a decision to reduce their output by 1.2 million barrels a day, while Russian Federation and other ten non-OPEC countries committed to decrease by 50% of this, reported Reuters.

  • Zachary Reyes