Washington, D.C. (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Brent crude on the Intercontinental Exchange on Wednesday morning recovered a portion of the pre-Christmas holiday sell-off, finding support from the Organization of Petroleum Exporting Countries renewed efforts to halt the slide in oil prices.
In midmorning trading, Nymex February West Texas Intermediate crude oil futures advanced $1.42 to trade around $43.94 barrel (bbl), after settling at the lowest price point since June 2017 on the spot continuous chart, while ICE February Brent crude gained $0.94 to $51.41 bbl. Nymex January ULSD futures traded up 1.80 cents to $1.6802 with January RBOB futures rallied 3.54 cents to $1.2743.
After aggressive sell-off in oil futures on Christmas Eve, investors are regaining confidence in market fundamentals from comments by a key OPEC official. Secretary General of Organization of Petroleum Exporting Countries Mohammad Barkindo said in the open letter to OPEC producers that the organization and its allies led by Russia will need to cut production by 3.02% to achieve the total cut of 1.2 million barrels per day (bpd), which is steeper than 2.5% originally discussed in Vienna. According to Reuters' reports OPEC is planning to release a table detailing voluntary supply cut quotas among its members and allies in an attempt to inject some support under plunging oil prices. "In the interests of openness and transparency, and to support market sentiment and confidence, it is vital to make these production adjustments publicly available" Barkindo stated.
Despite an agreement to cut 1.2 million bpd, oil prices have lost almost 10% since the conclusion of OPEC meeting in Vienna on Dec. 7. The slide in oil prices was mainly triggered by investors' concerns over slowing U.S. economy, exacerbated by Federal Reserve raising the interest rates, weakness in broader financial markets and expectations of intensifying U.S- China trade war in 2019.
According to the Bureau of Economic Analysis report released late last week, the U.S. economy grew at an annualized rate of 3.4% in the third quarter, down from its two preceding readings of 3.5%. Despite investors' heighted concerns over U.S. economic slowdown, the Federal Reserve hiked the federal funds rate 25 basis points for the fourth time this year, now at 2.5%, which contributed to recent broader weakness in financial markets.
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