Oil recovers as US-China talks begin

Oil Set for Longest Gain in 17 Months on U.S. Economy OPEC CutsMore

Oil Set for Longest Gain in 17 Months on U.S. Economy OPEC CutsMore

West Texas Intermediate Crude oil futures for February are up $1.44, or about 3%, at $49.40 a barrel.

"Oil prices averaged $68 per barrel (bbl) in 2018, a touch lower than June forecasts but about 30% higher than in 2017", according to the report. The dispute has weighed on economic growth, the Guardian reported.

What will be the average price for Brent Crude Oil in 2019? Traders are also expecting that the decision of OPEC and some non-OPEC members including Russian Federation to reduce crude output by 1.2 million barrels per day from this month will significantly alter supply - demand imbalance in the market.

Crude oil prices climbed for a fifth session in a row to hit $58 yesterday, rallying from last December 2018's 18-month low, thanks to the production cuts by the Organisation of Petroleum Exporting Countries (OPEC) and more stable equity markets.

Crude prices so far in 2019 have been buoyed by supply cuts from the Organization of the Petroleum Exporting Countries including top exporter Saudi Arabia, as well as non-member Russian Federation.

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.

Friday's better-than-expected jobs report, with 312,000 jobs created in December, helped to underscore strength in the US economy, assuaging some fears of an imminent recession in world's largest economy, along with market-supportive comments from the Federal Reserve.

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A separate government report scheduled for release on Wednesday is expected to show American crude stockpiles declined by 2.7 MMbbl last week, according to the median estimate in a survey of analysts by Bloomberg.

The US production of shale oil, which has added 5 mmbbl of oil to US output over the last decade to move America onto a similar level as Saudi Arabia and Russian Federation at around 11 mmbbl a day, has put a consistent downward pressure on oil prices in recent years.

Aside from the U.S.

Easing US-China trade tensions would underpin oil at current levels.

That report is expected to show that crude stocks fell by 1.4 million barrels for the week ended January 4, according to analysts polled by S&P Global Platts.

The market is closely watching USA supplies, which analysts expect pulled back 3.3 million barrels in the latest week. The contract closed 0.5% higher at $57.33 on Monday.

“Despite the daily move higher, near-term fundamentals continue to favor the bears, ” said Robbie Fraser, global commodity analyst at Schneider Electric.

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