Oil rises 3 pct on OPEC plan details, trade hopes

22 January, 2019, 00:15 | Author: Corey Lynch
  • A pump jack is seen at sunrise near Bakersfield

On Tuesday, China's National Development and Reform Commission gave support to crude oil prices when they spoke about adding more fiscal stimulus.

Neil Atkinson, head of oil industry and markets division at International Energy Agency, told Bloomberg television that "We think during the first quarter of 2019, supply and demand will be fairly closely matched" as long as the supply cuts promised by the Organization of the Petroleum Exporting Countries are implemented.

In response to the drop in price in the second half of last year, the Organization of the Petroleum Exporting Countries and non-members such as Russian Federation and Oman will slash production by a joint 1.2 million bpd this year.

The West Texas Intermediate for February delivery declined 0.24 USA dollar to settle at 52.07 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery decreased 0.14 dollar to close at 61.18 dollars a barrel on the London ICE Futures Exchange.

In response to the drop in price in the second half of last year, OPEC and non-members plan to cut production by a joint 1.2 million bpd this year.

This year, oil demand growth is expected to stay robust, but expected slowdown in emerging market and developing economies (EMDEs) could have a greater impact on oil demand than expected.

EIA's January Short-Term Energy Outlook forecasts that world benchmark Brent crude oil will average $61 per barrel (b) in 2019 and $65/b in 2020, an increase from the end of 2018, but overall it will remain lower than the 2018 average of $71/b. USA crude futures fell $1.00 to $51.31 a barrel, off 1.9 percent.

Skyrocketing US crude output, which neared a record 12 million bpd in early January, is fuelling some of the concern among traders and investors that growth in global supply this year will outpace demand.

"By the middle of the year, USA crude output will probably be more than the capacity of either Saudi Arabia or Russian Federation", said the IEA. Venezuela risks a fresh plunge in oil output, Barclays analysts said in a note.

The boom of shale oil production in the United States this decade has redrawn the map of global energy politics as the nation no longer depends as heavily on imports and has even resumed exports.

The U.S.is on its way to producing more crude than either Russian Federation or Saudi Arabia, who until recently vied for the top spot.

With the rig count stalling, last year's growth rate is unlikely to be repeated in 2019, although most analysts expect annual production to average well over 12 million bpd.



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