Oil hovers just below 2019 highs as markets look to trade talks

Oil hovers just below 2019 highs as markets look to trade talks

Prices of the barrel of the American benchmark for the sweet light crude oil are returning to the negative ground for the first time after five consecutive daily advances, including fresh yearly peaks in the $56.30/35 band (February 18).

State-owned Indian Oil Corp (IOC) has signed its first annual deal to buy U.S. oil, paying about $1.5 billion for 60,000 barrels a day in the year to March 2020 Reuters reported yesterday quoting the company's chairman.

Supply cuts led by the Organization of the Petroleum Exporting Countries have helped crude to rise more than 20 percent this year, although demand-side worries remain the main drag on the market. Brent earlier climbed to its highest since November 2018 at $66.78 a barrel.

Oil fell from its 2019 high of nearly $67 a barrel on Tuesday as concerns about the progress of US-China trade talks and slowing economic growth countered lower supplies.

International Brent crude futures hit a high of $66.78 per barrel before easing to $66.65 per barrel, up 0.6 per cent from their last close.

Oil has risen almost 25 percent so far this year and is on course for its strongest first-quarter performance since 2011, thanks largely to a commitment by the Organization of the Petroleum Exporting Countries and allies to cut output.

"The market is slowly regaining its bullish footing, subject to the perception of economic risks tied to US-China trade talks", said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas. So far into 2019, oil prices have gained around 25 per cent.

To stop a buildup of inventories that could weigh on prices, the group of OPEC and non-OPEC producers known as OPEC+ began a new supply cut of 1.2 million bpd on January 1.

At least partly offsetting supply falls has been a surge in United States crude oil production by more than 2 million bpd in 2018, to a record 11.9 million bpd.

"OPEC production cuts and USA sanctions on both Iran and Venezuela are limiting supply".

Refiners around the world are also having to pay more to secure supplies of the medium, or heavy, sour crudes produced by Iran and Venezuela, both of which are under USA sanctions.

Related Articles