Oil Rises Above $57 on China-US Trade Talks, OPEC Cuts

Oil Rises Above $57 on China-US Trade Talks, OPEC Cuts

Oil Rises Above $57 on China-US Trade Talks, OPEC Cuts

On Friday, oil prices rallied as the number of active US rigs drilling for oil declined after two straight weeks of gains.

According to the reached agreement, OPEC member states contribute 0.8 million bpd output cut and non-OPEC oil pumpers, including Russian Federation, contribute 0.4 million bpd output cut. WTI decreased 0.57 percent, and Brent crude decreased 3.01 percent.

Data for December from the Institute for Supply Management (ISM) on Thursday showed the broadest US slowdown in growth in a decade.

Oil prices rebound during the week ending January 4, with the price of West Texas Intermediate (WTI) for February delivery increasing by 5.8 percent and Brent crude for March delivery increasing by 9.3 percent.

The rating agency noted that the OPEC announcement "did little to stem the decline in oil prices as concerns about global demand and whether OPEC would honour the production cuts, continued to put pressure on prices" but said "the production cuts at a minimum, will offset the anticipated growth in 2019 from USA shale production".

More broadly, oil markets have been sliding with rising production from top producers, the United States and Russian Federation. Top exporter Saudi Arabia made an early start to a supply-limiting accord, while Iran and Libya posted involuntary declines.

S&P Global Ratings' competitor Moody's has also recently noted concerns about the oil market. That's when OPEC declared a production war on US shale producers.

Global slowdown fears were being pitted against the OPEC cuts, Phil Flynn of the Price Futures Group in Chicago observed in his Thursday note on oil, although he said the cartel "is prepared to do whatever it takes to stabilize prices, even if it means losing some market share to the shale oil producers".

"The market is likely to take some comfort from the fact that crude oil production from the OPEC+ will continue to drop", said Ole Hansen of Saxo Bank.

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Will We Witness a Recovery in Oil Prices After Monday's Calamity?

China's commerce ministry said that it would hold vice-ministerial level trade talks with USA counterparts in Beijing on January 7-8.

"The outlook for commodities is modestly positive despite a challenging global macro environment".

The victor of the 2018 bet was Platts oil reporter Brian Scheid, whose prediction of Brent crude finishing the year at $57 per barrel was the closest to the actual year-end price of $53.80 per barrel.

While OPEC has not ruled out further action, officials hope prices will be supported by further output declines in January as producers implement the new deal. Over the past few years, the country has faced budget deficits due to the market's unstable oil prices. Furthermore, other private trackers believe that the drop may be the biggest in exports since Bloomberg began tracking shipments in early 2017.

"I think we can easily do with this surplus and reach market rebalance in one or two months.in the first quarter of next year", the minister said last month at a Press conference in Kuwait City.

According to the deal, OPEC would cut production by 800,000 bpd while non-OPEC would make up the rest.

"If the production cuts of 1.2 million barrels a day is not enough, we will meet again to see what is enough and apply it", he said.

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