RIYADH: After dwindling to near 16-month lows at the end of
2018, oil prices bounced back in the first week of the year, helped
by OPEC’s proactive output cuts and positive economic news from
The year 2019 started with a progressive rebound in oil prices
after the 2018-year end nose-dive when Brent crude ended slightly
above $52 per barrel. The first week in 2019 closed with Brent
crude at $57.06 per barrel and WTI at $47.96 per barrel — one of
the best weekly gains in two years.
It marked a change in the bearish sentiment that produced heavy
losses in December 2019 when Brent averaged $56.55, the lowest
monthly average since September 2017.
OPEC output fell by 530,000 bpd to 32.6 million bpd in December,
which is the sharpest pullback since January 2017.
As usual, Saudi Arabia handled most output cuts in December of
420,000 bpd to 10.65 million bpd from a record of just above 11
million bpd reached in November 2018.
The Saudi output cut was compounded by unplanned losses in Iran and
Saudi Arabia proactive move has confounded some of the raised
voices that called for depressed oil prices “lower for
These voices suggested oil prices would be weak in 2019 with
sluggish demand for crude and the uncertainty over full compliance
from OPEC members, including the largest producer Saudi Arabia,
over the agreed 1.2 million bpd supply reduction.
On the physical market side, expectations for continued strong oil
demand growth in 2019 remain in place, despite concerns about the
global economic slowdown that were offset by the positive economic
data from the US.
The steep downward price volatility that the oil market experienced
at the end of 2018 may have attled US shale oil investors.
During the last quarter of 2018, macroeconomic headwinds raised the
specter of a slowing global economy and lower oil demand growth,
putting downward pressure on prices while the physical market
remained strong throughout 2018.
Oil rises on US-China trade talks, supply cutsLibya plans to more
than double oil output to 2.1 million bpd: NOC
Source: FS – All-News-Economy
Oil bulls oust bears in the first week of 2019