Oil prices edged down on Wednesday as the market waits to see how OPEC and non-OPEC members carry through on planned supply cuts in the new year.
International Brent crude futures were trading down 7 cents, or 0.12 percent, at $56.02 a barrel at 0722 GMT after closing the previous session up 93 cents.
U.S. benchmark West Texas Intermediate (WTI) crude oil prices were down 8 cents at $53.82 per barrel after settling up 88 cents at $53.90 a barrel in the previous session.
Trading is expected to remain thin this week ahead of the New Year holiday.
The market is taking a wait-and-see approach on the official start of the landmark deal reached by the Organization of the Petroleum Exporting Countries (OPEC) and several non-OPEC members to reduce their output. The deal is set to kick in from Jan. 1.
OPEC and non-OPEC producers are expected to lower production by almost 1.8 million barrels per day (bpd), with Saudi Arabia, OPEC’s largest producer, agreeing to bear the lion’s share of the cuts.
“There are mixed expectations of the cuts, trading is thin so the first two weeks of January would be critical to watch,” said Michael McCarthy, chief market strategist at Sydney’s CMC Markets.
“If there’s any misstep or any indication of disagreement to (the deal), we would see crude prices dropping,” he said.
In a sign that the world’s oil major producers may abide by their agreement, OPEC member Venezuela said it will cut 95,000 bpd of oil production in the New Year.
Russian oil producer Gazprom Neft said it planned to boost oil output by 4.5 percent to 5 percent next year, less than it had intended before Russia, one of the non-OPEC member countries, joined a deal to reduce a global supply overhang.