Oil rose on Thursday, buoyed by a draw down in U.S. crude stockpiles and indications that China is taking concrete steps to put a trade war truce with Washington into action.
Crude oil prices have also been supported by OPEC-led supply curbs announced last week, although gains were capped after the producer group lowered its 2019 demand forecast.
International Brent crude oil futures were at $60.47 per barrel at 0442 GMT, up 32 cents, or 0.5 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $51.35 per barrel, up 20 cents or, 0.4 percent.
In a sign that China is willing to lessen the trade tensions with United States, the country made its first major U.S. soybean purchases in more than six months on Wednesday, helping investors breathe a sigh of relief across broader stock markets, and pushing oil prices up.
A drop in U.S. crude stocks also boosted oil, which has been riding higher on expectations that the OPEC-led planned output cuts would re-balance the market in 2019, analysts said.
U.S. crude inventories fell by 1.2 million barrels in the week to Dec. 7, compared with expectations for a decrease of 3 million barrels.
“The agreement of a reduction in output of 1.2 million barrels per day at last week’s OPEC meeting should see the market push into (supply) deficit in H1 2019,” ANZ analyst Daniel Hynes said.
“Rising U.S. output, weaker economic growth and the production cut agreement roll-off will see a balanced market in H2,” Hynes said. ANZ expects Brent to reach $75 a barrel in the first quarter of 2019.
The Organisation of the Petroleum Exporting Countries (OPEC) said demand for its crude in 2019 would fall to 31.44 million barrels per day (bpd), 100,000 bpd less than predicted last month and 1.53 million bpd less than it currently produces.
This adds to the concerns of several market watchers that the decision led by the group to cut production might not be enough to override a glut or push prices higher.
Oil market participants are concerned about the likelihood of weaker macroeconomic growth, which could rein in any expansion in oil demand, analysts said.
“If we do see a reduction in global growth risk, then we are monitoring increases in demand in combination with supply being absorbed,” said Hue Frame, portfolio manager at Frame Funds in Sydney.
“There are so many moving parts at the moment that it is difficult to provide a convincing forecast,” Frame said.
He added, however, that there is a significant upside to prices going forward.
Source: Reuters
