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by Stockwatch Business Reporter

West Texas Intermediate crude for February delivery got as high as $55.24 before reversing course and settling at $52.33, down $1.39 (all figures in this para U.S.). Brent for March touched $58.37 before closing at $55.47, down $1.35. Western Canadian Select traded at a discount of $16.00 to WTI ($36.33), down from a discount of $15.95. Natural gas for February plunged 40 cents to $3.32, on warmer weather forecasts. The TSX energy index added 1.48 points to close at 222.39.

The first trading day of 2017 brought mixed feelings for oil observers. All eyes were on the OPEC and non-OPEC producers that had promised to start cutting production on Jan. 1. As announced in November and December, most OPEC members and various non-OPEC countries, including Russia, said they would cut production by approximately 1.8 million barrels a day, in order to help drain a global supply glut. Yet some observers are worried that the proposed cuts will not be honoured. As well, non-participating countries could erode the agreement's effectiveness. For example, Libya, one of two OPEC members exempt from the cuts (the other being Nigeria), has just increased its production to 685,000 barrels a day, up from around 600,000 in December, according to an official at the country's National Oil Corp. (as reported by Reuters). A separate concern for oil prices today was the rising U.S. dollar, which reached its highest level since 2002. A high U.S. dollar makes oil and commodities more expensive in other currencies, blunting demand.

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