Home The Watchforex news Oil jumps 3% this week on OPEC supply cuts and US-China trade hopes

Oil jumps 3% this week on OPEC supply cuts and US-China trade hopes

by Amwal Al Ghad English
oil

Oil touched more than three-month highs on Friday, supported by rising hopes that the United States and China would soon reach a deal to end their trade war, but new record U.S. oil production limited gains.

U.S. West Texas Intermediate crude oil futures ended Friday’s session 30 cents higher at $57.26 per barrel, its highest closing price since mid-November. WTI also set a fresh intraday high for 2019 at $57.81 and posted a 3-percent weekly rise.

International Brent crude futures were down 2 cents at $67.05 per barrel around 2:30 p.m. ET, after striking a fresh high of $67.73 going back to mid-November. Brent was on track for a weekly gain of about 1.2 percent.

Traders said prices were lifted by hopes that Washington and Beijing could resolve their trade disputes, which have dented global economic growth.

The broad outline of a possible U.S.-China trade deal was beginning to emerge from talks between the two countries, sources told Reuters on Thursday.

Both sides are pushing for an agreement by March 1, the end of a 90-day truce agreed by U.S. President Donald Trump and Chinese President Xi Jinping late last year.

“Should risky assets receive some additional optimistic news out of the ongoing U.S.-China trade talks amidst potential weakening in the U.S. dollar, WTI could easily achieve our stated target to the $58 area today,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Prices continue to be supported by supply cuts led by the OPEC and its allies, including Russia. The group, known as OPEC+, agreed in December to cut output by 1.2 million bpd to prevent a crude supply glut from growing.

Surging U.S. crude oil production, is partly offsetting OPEC’s cuts.

“We see total U.S. crude production hitting 13 million bpd by year-end, with 2019 averaging 12.5 million bpd,” U.S. bank Citi said following the release of the EIA report.

The bank said that some weeks could see 4.6 million bpd of gross crude exports by year-end, topping last week’s record of 3.6 million bpd.

U.S. energy firms this week cut the number of oil rigs operating for the first time in three weeks. Drillers cut four oil rigs in the week to Feb. 22, bringing the total count down to 853, General Electric’s Baker Hughes energy services firm said in its closely followed report on Friday.

With U.S. supply surging, Goldman Sachs said it expected non-OPEC supply to grow by 1.9 million bpd this year, more than offsetting the OPEC cuts.

That means much will depend on demand, which Goldman said it expected to grow by 1.4 million bpd this year.

Given the supply and demand picture, Goldman said it expected an average Brent price of $60-$65 per barrel in 2019 and 2020.

Source: Reuters

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