Crude Oil Prices Surge Higher

Crude Oil Prices Surge Higher

Crude Oil Prices Surge Higher

"Absent such a large slowdown, we expect prices to recover further, although growth uncertainty will likely require strengthening physical oil markets to drive this rally, with encouraging evidence that the OPEC cuts are starting".

Futures in NY increased as much as 1.9% following six days of gains, the longest streak of increases since July 2017.

U.S. Commerce Secretary Wilbur Ross said on Monday that there was a "very good chance" of reaching a settlement, while China's Foreign Ministry said Beijing had the "good faith" to resolve trade friction with the United States.

Brent crude, the global benchmark, was trading 2.5 per cent up at $58.60 a barrel last night as officials from the two countries began talks yesterday.

Meanwhile, expectations for a nationwide decline in United States crude inventories alleviated worries about a supply glut. If the worst can be avoided, there is a lot more room to the upside for crude prices, particularly since oil traders have grown pessimistic about the fate of the global economy.

Some analysts believe that this round of talks are unlikely to yield any fruit and fear the talks may go down to the wire, which is essentially the March 1 truce deadline agreed upon by U.S. President Trump and China's President Xi Jinping on December 1. The U.S. Federal Reserve signaling a hold in interest-rate hikes that had spurred risk aversion and volatility across global financial markets is also boosting oil.

"In the last few months of 2018, the tensions between fundamentals, sentiment and prospects about the macro environment all shaped price behaviour and this will continue in 2019", it added in its report.

The oil prices are drawing support from an agreed supply cut by the Organization of the Petroleum Exporting Countries, well as some non-member countries such as Russian Federation and Oman.

Brent crude futures rose 27 cents to settle at $57.33 a barrel, a 0.47 percent gain.

"Saudi Arabia will continue to be the decisive factor for the markets this year, just as they were last year", said Mr Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.

West Texas Intermediate Crude oil futures for February are up $1.44, or about 3%, at $49.40 a barrel.

The crude prices have declined by 40% after declaring the 4 year high, which was over $76 per barrel. The current round of talks are scheduled to continue through January 8, with more senior-level discussions likely later this month.

As a result, US crude oil production rose by 2 million barrels per day (bpd) previous year to a world record 11.7 million bpd.

Related news

[an error occurred while processing the directive]