Brent hits new 2019 high on US-China trade talk hopes

Brent hits new 2019 high on US-China trade talk hopes

Opec, as well as some non-affiliated producers such as Russian Federation, agreed late a year ago to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from growing.

Contributing to the cautious optimism on Thursday was Nancy Tengler, chief investment strategist at Tengler Wealth Management, told CNBC television that while she anticipates a crude market slowdown, "if we see anything coming out of China positively in terms of global growth, we're going to start to see things re-accelerate".

Oil prices fell below 2019 highs on Thursday after US government data showed a fifth weekly build in crude inventories and record production, while concerns about slowing global economic growth weighed.

Citing a goal to reduce the country's dependence on imported crude by 10 percent by 2022, Narendra Modi, prime minister for India, on Thursday endorsed revamped rules that will give producers pricing and marketing freedom that is now non-existent.

As for the USA shale juggernaut, Kevin O'Brien, chief business officer at Orbital Insight, told Bloomberg television that inventories stateside have climbed about 3 percent in the past 30 day, s "and we're thinking there will continue to be a build up in the actual inventory, driven in part by the shale operators".

Prices have also been supported by supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC).

Traders said prices were lifted by hopes that Washington and Beijing could resolve their trade disputes, which have dented global economic growth. "While a glut is taking hold in USA crude stocks, product stockpiles inched lower thanks to robust domestic demand", Mr. Brennock added.

On Tuesday, EIA forecast output from seven major USA shale fields will rise by 84,000 bpd next month to 8.4 million bpd.

"After the recent Fed Minutes, the USA dollar has sold off, lifting crude oil on news the Fed plans to hold off on rate hikes, and balance sheet reduction", he said.

United States commercial crude oil inventories rose by 3.7-million barrels to 454.5-million barrels in the week ended February 15, the EIA said. America is the only country to reach 12 million bpd of production.

Of that, the bank said, "we could be seeing some weeks with 4.6-million bpd of gross crude exports by end-year, adding to this week's new record" of 3.6-million bpd.

Oil prices hovered around 2019 highs on Thursday, bolstered by OPEC-led supply cuts and USA sanctions on Venezuela and Iran, but were capped by slowing growth in the global economy.

With U.S. 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.

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