Oil climbs 1 percent as OPEC output drop eases concerns about glut

Oil climbs 1 percent as OPEC output drop eases concerns about glut

Oil climbs 1 percent as OPEC output drop eases concerns about glut

Stock markets are still up so far this month, which has given oil investors more confidence to bet aggressively on a rise in crude prices.

Analysts said oil prices had been weighted down by the expectations of weaker economic growth which would lead to weaker crude oil demand. However, news hit the market during North American market hours that USA officials are considering reversing tariff's imposed on Chinese import goods in a bid to ease the impact of trade war on United States economy and help close a trade deal with China.

The Organization of the Petroleum Exporting Countries issued a list of oil production cuts by its members and other major producers for six months starting on January 1 to boost confidence in its oil supply reduction pact.

Brent crude oil futures LCOc1 were down 13 cents at $62.57 a barrel by 1207 GMT, while USA crude futures CLc1 lost 10 cents at $53.70 a barrel.

USA gasoline production increased last week, averaging 9.6 million barrels per day. Economists are expecting a draw of -1.4 million barrels in crude oil inventories which is sort of bullish. US West Texas Intermediate (WTI) crude futures rose $1.55, or 3 percent, to $53.62 a barrel.

Oil prices were up early on Monday, steadying at a two-month high last seen in mid-November, as the plunging US rig count last week signaled a slowdown in shale drilling amid the lower price of oil.

Opec secretary-general Mohammed Barkindo last week said the organisation remains "acutely conscious" of the importance of a sustainable, stable oil market for the global economy. Refinery utilization rates fell by 1.5 percentage points.

Saudi supply in November had hit a record above 11 million bpd after President Trump demanded more oil be pumped. Prices got another boost later, on expectations that U.S. sanctions on Iran would cut supplies to major importers including China, India and Japan.

Norbert Ruecker, head of commodity research at Swiss bank Julius Baer, said "the United States is moving forward towards energy independence and is set to become a petroleum net exporter next year thanks to rising shale output". While a prolonged government shutdown in the US and uncertainties over the health of the global economy have rattled broader financial markets, oil prices have responded to signs that the Organization of Petroleum Exporting Countries and its allies have started to clear a glut.

The U.S.is on its way to producing more crude than either Russian Federation or Saudi Arabia, who until recently vied for the top spot.

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