Oil Steadies Near Two-Month High as U.S. Drilling Slows Down

Oil Steadies Near Two-Month High as U.S. Drilling Slows Down

Oil Steadies Near Two-Month High as U.S. Drilling Slows Down

Futures were on track for a third straight week of gains, with Brent crude up $1.64 to $62.82 a barrel, or 2.7 per cent. US West Texas Intermediate (WTI) crude futures rose $1.55, or 3 percent, to $53.62 a barrel.

China's crude oil imports in 2019 are likely to rise before the impact of the OPEC+ output cuts on the market. The bank now expects Brent to average $61 a barrel this year, down from a previous estimate of $69, and US crude to average $54, against a prior forecast of $60.

Saudi Arabia slashed its crude shipments to refiners in the U.S.by 32% to 684,000 bpd in the week ended January 11, after exporting more than 1 MMbpd the previous week, according to preliminary data from the EIA.

"Trade war concerns have reduced global growth expectations and with it comes a lower demand for energy", said Alfonso Esparza, senior analyst, OANDA.

Alongside Russia and nine other nations, top oil exporter Saudi Arabia struck a deal with the rest of OPEC in December to keep 1.2 million b/d off the market from the start of January.

The expert believes that bearish trends include a rising United States crude oil production, which reached 11.5 million b/d in November.

Signs of progress on trade "have greased the wheels in commerce globally", Bob Iaccino, chief market strategist at Chicago-based Path Trading Partners, said in an interview.

That said, it's undeniable that crude's performance so far in 2019 is a far cry from the steep price plunges experienced in the closing months of 2018, a point not lost on Bloomberg, which on Friday noted that the commodity hasn't started off this strong since the turn of the century.

Falling oil exports from Iran due to USA sanctions that were reimposed in November, have offered some support to fuel prices.

He said factors such as rising US production and its trade dispute with China would cap price gains, "negating much of the benefits from the OPEC+ pact".

Oil retreated toward $51/bbl as record production in the US undercut assurances from Russian Federation that it will step up efforts to drain global supplies.

Also, the United States oil output could slowdown in the near future.

After closing out 2018 in free-fall amid fears of a global supply glut and economic slowdown, U.S. crude prices have rebounded more than 18% to start this year. China saw its exports fall unexpectedly in December by 4.4 percent, the most in two years, with imports also falling 7.6 percent in their biggest decline since July 2016.

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