The oil market will be closely following the actions of OPEC and non-OPEC members to see whether they will implement their proposed production cuts. OPEC members have agreed to reduce production by 1.5 million barrels of oil per day (bopd) on January 1 with non-OPEC members such as Norway, Russia and Mexico pledging cuts of almost 500,000 bopd.

The Russians gave the market the jitters after news it had lifted restrictions on fuel exports. According to analysts, without the cooperation of Russia, the price of oil could fall to its November low of $US16.70 bbl.

The oil market will be looking to improved economic conditions in the US to help lift prices. The latest figures from the OECD show US economic indicators rising along with business and consumer confidence. Industrial production, a primary driver of demand for commodities such as oil, rose in December, the first month-on-month rise for the year.