Oil prices down despite Saudi export cuts

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But looming over the OPEC-led cuts is a surge in US oil supply - now the world's top producer - driven by a steep rise in onshore shale drilling.

Oil futures have gained about 10 percent since last Monday.

The United States and Beijing have been locked in an escalating trade spat since early 2018, raising import tariffs on each other's goods.

International Brent crude futures were at $57.42 per barrel at 0742 GMT, up 9 cents, or 0.2 per cent from their last close. Meanwhile, expectations for a nationwide decline in US crude inventories alleviated worries about a supply glut.

A potential agreement between China and the U.S. could help avoiding a slowdown in both China and the global economy, as this has been one of the main drivers of the slump in crude oil prices in the Q4 2018. Talks with China are "going very well", U.S. President Donald Trump said in a tweet as the delegations in Beijing extended their meeting into Wednesday.

West Texas Intermediate for February delivery increased as much as 44 cents to $48.96 a barrel on the New York Mercantile Exchange, and traded 2 cents higher at $48.54 a barrel at 7:45 a.m.in London.

The oil prices are drawing support from an agreed supply cut by the Organization of the Petroleum Exporting Countries, well as some non-member countries such as Russian Federation and Oman.

"There a confluence of factors helping - a big driver is progress in trade talks and hopes that global growth will be supported", said Stephen Innes, head of trading for Asia Pacific at Oanda Corp.

The crude prices have declined by 40% after declaring the 4 year high, which was over $76 per barrel.

Investor confidence grew as the trade talks showed signs of progress.

Under the ongoing Opec+ agreement, Saudi Arabia has agreed to cut its oil supply by 3%. The current round of talks are scheduled to continue through January 8, with more senior-level discussions likely later this month.

Record high crude oil production C-OUT-T-EIA has also pushed up USA inventories, which rose by almost 17 percent in 2018 to their highest in well over a year, according to weekly data by the Energy Information Administration (EIA) on Friday. Nationwide inventories are near their lowest level in nearly two months. Heavy Canadian crude surged to the strongest level in more than a year as rail shipments keep rising even as production was curtailed.

Rising production from North American shale basins, particularly the USA, which surged past 11 million bpd in August, outpaced sovereign producers Saudi Arabia and Russian Federation and was one of the factors behind the market's oversupply, the report said.

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