ENERGY

Oil hits new 2019 high above $67 on US-China trade talk hopes

Surging US crude oil production which reached 12 million bpd for the first time last week, is partly offsetting the OPEC cuts.(Reuters)

Oil prices rose on Friday, supported by OPEC’s ongoing supply cuts and hopes that Washington and Beijing may soon end their trade dispute.

International Brent crude futures hit a new 2019 high of $67.60 a barrel, up 53 cents from Thursday’s close.

Further gains were tempered by US crude oil production hitting a record 12 million barrels per day (bpd) and a surge in exports from the country.

By 1125 GMT, US West Texas Intermediate (WTI) crude oil futures were up 51 cents at $57.48 per barrel but still shy of this week’s $57.55 per barrel 2019 high.

The broad outline of a possible US-China trade deal was beginning to emerge from talks between the two countries, sources told Reuters on Thursday.

The two sides are pushing for an agreement by March 1, the end of a 90-day truce agreed by US President Donald Trump and Chinese President Xi Jinping late last year.

“Yesterday...volume was low and US data on crude and products was mixed, so the market didn’t really react,” Olivier Jakob of Petromatrix consultancy said.

“Anything positive today on trade talks will boost the oil price.”   

Opec supply cuts 

Prices are being supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).

OPEC and some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million bpd to prevent a large supply overhang from growing.

Surging US crude oil production, which the Energy Information Administration (EIA) said reached 12 million bpd for the first time last week, is partly offsetting the OPEC cuts.

That means US crude output has soared by almost 2.5 million bpd since the start of 2018, and by a whopping 5 million bpd since 2013. America is the only country to ever reach production of 12 million bpd.

US commercial crude oil inventories also rose, by 3.7 million barrels to 454.5 million barrels in the week ended Feb. 15, the EIA said.

Analysts say US output will increase further and oil firms will raise exports to shift surplus stocks.

“We see total US crude production hitting 13 million bpd by year-end, with 2019 averaging 12.5 million bpd,” US bank Citi said following the release of the EIA report.

The bank said that some weeks could see 4.6 million bpd of gross crude exports by year-end, topping this week’s record of 3.6 million bpd.

With US supply surging, Goldman Sachs said it expected non-OPEC supply to grow by 1.9 million bpd this year, more than offsetting the OPEC cuts.

That means much will depend on demand, which Goldman said it expected to grow by 1.4 million bpd this year.

Given the supply and demand picture, Goldman said it expected an average Brent price of “$60-$65 per barrel in 2019 and 2020”.

SHOW MORE
Last Update: Friday, 22 February 2019 KSA 21:17 - GMT 18:17
Top
BREAKING NEWS

Send to a friend

Close
Oil hits new 2019 high above $67 on US-China trade talk hopes
Friend's name:
Friend's Email:
Sender's name:
Sender's Email:
Captcha Code
How are we doing?
X

How are we doing?

Name Name *
Email Email *
Country Country
Message Message *
Maximum 550 words allowed