Oil jumps on Saudi and OPEC cuts

Author: 
Reuters
ID: 
1550006727573515000
Thu, 2019-02-14 00:25

LONDON: Oil prices surged on Tuesday, supported by OPEC-led
production cuts, which Saudi Arabia said it would surpass by more
than half a million barrels per day (bpd), and by US sanctions
against Iran and Venezuela.
Brent crude futures were up almost 3 percent while West Texas
Intermediate (WTI) crude oil futures also gained by a similar
measure. Markets are tightening because of voluntary production
cuts from Jan. 1, led by OPEC and allies including Russia, aimed at
forestalling a global overhang.
Saudi Arabia, the world’s top oil exporter and de facto leader of
OPEC, said it would reduce crude production to about 9.8 million
bpd in March, over half a million bpd more than it had originally
pledged. Energy Minister Khalid Al-Falih announced the move in an
interview with the Financial Times published on Tuesday as the
Kingdom seeks to drive up oil prices to help fund an economic
transformation plan.
However, rising US oil production, fighting near Libya’s main
oilfield, sanctions on Venezuela and suspense over whether
Washington will grant more waivers to import Iranian oil have left
markets unsure about broader supply. OPEC cut its forecast for 2019
world oil demand on Tuesday, citing slowing economies and
expectations of faster supply growth from rivals, underlining the
challenge it faces in preventing a glut. Also on the radar are
hopes expressed by US and Chinese officials that a new round of
talks, which began in Beijing on Monday, would bring them closer to
easing their months-long trade war.
Beijing and Washington are trying to hammer out a deal before a
March 1 deadline, without which US tariffs on $200 billion worth of
Chinese imports are scheduled to rise to 25 percent from 10
percent. The suspense over the talks continues to affect oil
markets.
“Resumption of the US-China trade talks has prompted risk
appetite in financial markets, which has also manifested in oil
prices gaining strength,” said Abhishek Kumar, senior energy
analyst at Interfax Energy in London. “Nevertheless, there needs
to be a tangible outcome from the talks for a sustained rally in
prices.” But Bank of America warned of a “significant
slowing” in global growth, adding that it expects Brent and WTI
to average $70 and $59 a barrel respectively in 2019, and $65 and
$60 in 2020.

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Source: FS – All-News-Economy
Oil jumps on Saudi and OPEC cuts