WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange crude oil futures nearest delivery and Intercontinental Exchange Brent futures extended higher for a seventh day, bolstered by aggressive output cuts from Saudi Arabia and expectations that U.S.-China talks would ease trade tensions between the world's largest economies.
Oil futures continued their short-term uptrend with Nymex February West Texas Intermediate futures shifted $0.98 higher to trade at $49.50 barrel (bbl), while ICE March Brent registered $1.09 advance to $58.42 bbl. Nymex February ULSD futures gained 3.24 cents to $1.8108 gallon and February RBOB futures rallied 0.94 cents to a $1.3502 at the start of Tuesday trading session.
Oil futures rallied in early trade as delegates from the United States and China met in Beijing for the second day in a two-day meeting between mid-level officials, resuming negotiations in an effort to resolve their trade dispute. The American delegation is led by a deputy U.S. trade representative, Jeffery D. Gerrish and includes agriculture, energy, commerce, and Treasury and State Department officials. Despite the uncertainty over the outcome of talks, equities surged Tuesday morning with the Dow Jones Industrial Average advancing 300 points and S&P 500 gained 0.95% on hopes of U.S.-- China trade truce. President Trump and Chinese President Xi Jinping agreed on Dec. 1 to postpone more tariff hikes on each other's countries for 90 days, allowing for continued negotiations. However, some economists suggest that three months negotiating period is not enough time to resolve issues that have disrupted U.S.--China relations for years.
As traders gain optimism, Saudi Arabia appears to be fully committed to reducing output and crude exports in support of global oil prices. The Wall Street Journal reported Monday afternoon that the country wants to cut its crude exports to 7.1 million barrels per day (bpd) in January, down from 7.9 million bpd in November. The top oil producer reportedly needs global oil price to be at $80 bbl to balance the budget, as the kingdom seeks to revitalize the lackluster economy.
In other news, the United Arab Emirates energy minister said that a joint OPEC and non-OPEC monitoring committee would meet in Baku, Azerbaijan at the end of February or the beginning of March to review the current production agreement to cut output by 1.2 million bpd, which took effect Jan. 1.
The meeting will be held ahead of already scheduled biannual April review, as producers aim to inject stability into the oil market. The UAE official also indicated that OPEC and allied oil producers will do what is needed if current agreement is not enough to balance the market in 2019.
Liubov Georges can be reached at Liubov.firstname.lastname@example.org
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