Oil Higher in Friday Trade
WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Intercontinental Exchange Brent futures gave up early gains Friday morning after West Texas Intermediate and Brent reached five week highs overnight, fueled by output cuts by Saudi Arabia and optimism over the progress of U.S. -- China trade talks.
After rallying for nine consecutive sessions, the WTI February contract eased $0.69 to $51.90 barrel (bbl) while ICE March Brent was down $1.10 to $60.58 bbl. Nymex February ULSD futures lost 1.17 cents to $1.8944 gallon while February RBOB futures declined 1.14 cents to $1.4193 gallon.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Oil futures were lent upside support this week on news of sharp output cuts by Saudi Arabia, with the kingdom making the lion's share of production cuts agreed to by the Organization of the Petroleum Exporting Countries. OPEC and their non-OPEC partners led by Russia agreed to collectively cut output by 1.2 million barrels per day (bpd) during the first six months of 2019, with OPEC responsible for 800,000 bpd of the reduction.
Saudi Arabia energy minister Khalid al- Falih said this week the country is already producing 100,000 bpd less than the 10.3 million bpd agreed upon in Vienna, Austria, at the beginning of December. The Saudi minister also confirmed that the country would reduce crude exports to 7.1 million bpd next month, down 800,000 bpd from November.
According to a Reuters' survey, OPEC oil output dropped 460,000 bpd in December to 32.68 million bpd, the steepest decline from the cartel since January 2017.
Oil futures were also supported this week by improving market sentiment bolstered by optimism that a resolution to the trade dispute between the United States and China would be reached following what U.S. and Chinese officials described as encouraging discussions during their three day meeting in Beijing this week. Although trade negotiations have not produced a concrete agreement, positive statements from Washington and Beijing rallied equities and oil futures earlier this week.
This week's meeting between midlevel trade representatives is to be followed by a meeting with senior trade representatives from both countries later this month. According to Bloomberg, Chinese Vice Premier Lie He, a top economic advisor to Chinese President Xi Jinping, was among attendees during the first day of this week's negotiations.
Liubov Georges can be reached at liubov.georges@dtn.com
(BAS)
Copyright 2019 DTN/The Progressive Farmer. All rights reserved.