Oil rises to US$57 on China-US trade talks, Opec cuts
Oil rises to US$57 on China-US trade talks, Opec cuts
People stand in front of the headquarters of the Organization of the Petroleum Exporting Countries OPEC in Vienna Austria. Ronald Zak
05 January, 2019, 15:37
Oil prices fell by 1 to 2 percent on Thursday amid volatile currency and stock markets, and on concerns that an economic slowdown in 2019 will cut into fuel demand just as crude supplies are surging.
Spot prices ranged between $45.61/bbls and $47.66/bbls, ending on the $47 handle.
Oil prices climbed on Thursday in choppy trading after separate surveys indicated crude output in major oil producers declined, Trend reports citing Xinhua.
Others are not sitting idle, with Russian output reaching a record of more than 11 million bpd in 2018.
But the OPEC cuts may matter less if China, and by extension the world, is on the cusp of a recession, analysts say.
In physical oil markets, Dubai crude averaged $57.318 a barrel for December, the lowest since October 2017, two traders who participate in the market said on Wednesday.
Reuters quoted analysts as saying that Saudi Arabia, the biggest producer in OPEC, and several others curbed supplies in the face of rising United States production and inventories. But in a market focused on total production numbers, it is USA crude that is determining price direction.
"Demand concerns started to take over", said Cailin Birch, a global economist at The Economist Intelligence Unit in London. The U.S. Energy Information Administration forecasts American output will rise to 12.1 million barrels a day in 2019, up 1.2 million barrels a day from the previous year.
Exports from Saudi Arabia dropped by half a million barrels a day last month because of falling sales to refineries in China and the United States, according to figures by Bloomberg. "Now we're starting to see that". "The current bearish bias will, therefore, continue in the near term and it stands to reason that oil will struggle to break out from its current trough".
Oil LCOc1 has slid to $56 a barrel from a four-year high of $86 in October on signs of excess supply.
Brent crude headed for its biggest weekly gain since December 2016 as Saudi Arabia's production cuts outweighed concerns over the health of the global economy. Optimism that the US and China are working toward a thaw in trade tensions has helped bolster prices.
Trump, meanwhile, kept up his campaign to push prices down, boasting in a tweet Tuesday about low gasoline prices that he likened to a tax cut for consumers.
Data from the Institute for Supply Management (ISM) on Thursday showed USA factory activity slowed more than expected in December, mirroring similar data releases in Asia over the past week.
Oil markets dropped by around 1 per cent in 2019's first trading on Wednesday, pulled down by surging USA output and concerns about an economic slowdown in 2019 as factory activity in China, the world's biggest oil importer, contracted. In addition, the USA oil production will continue to add a bearish tone, separately said independent analyst Lakshan de Silva.
However, crude oil prices plummeted quickly after that.
But OPEC is hopeful the supply-cutting deal will work.
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