Oil prices rise over two percent on trade talk optimism

Goldman cuts 2019 crude price view; sees recovery from current levels

Goldman cuts 2019 crude price view; sees recovery from current levels

The aim of the OPEC cuts is to rein in a surge in global supply, driven mostly by the United States, where daily oil production grew by almost a fifth to over 11 million bpd in 2018.

Oil futures have gained about 10 percent since last Monday.

WTI and Brent were each up 2 percent during midday trading, with WTI closing in on $50 per barrel and Brent jumping above $58 per barrel.

The first trading day of the week was also stimulated by declining USA crude inventories.

A potential agreement between China and the United States could help avoiding a slowdown in both China and the global economy, as this has been one of the main drivers of the slump in crude oil prices in the Q4 2018.

The rise came as China and the USA sit down together in Beijing today.

Oil prices climbed about 3 percent on Monday, rebounding further from 1-1/2-year lows reached in December on support from OPEC production cuts and steadying equities markets.

Crude is seeing a tentative recovery after fears of oversupply and weakening global growth drove prices past year to their worst annual slump since 2015. Traders are also expecting that the decision of OPEC and some non-OPEC members including Russian Federation to reduce crude output by 1.2 million barrels per day from this month will significantly alter supply - demand imbalance in the market.

"Saudi Arabia will continue to be the decisive factor for the markets this year, just as they were last year", said Mr Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.

Once again, the Organization of the Petroleum Exporting Countries' (OPEC) newly-implemented output cuts were credited for crude prices rising yet again on Monday: Brent rose 27 cents to settle at $57.33 per barrel, while West Texas Intermediate rose 56 cents to settle at $48.52 per barrel. While six months may be enough to reduce the combined output of OPEC and its partners by the agreed 1.2mn bpd, if United States production continues to grow at the current rate, it would likely offset this cut completely. The current round of talks are scheduled to continue through January 8, with more senior-level discussions likely later this month.

A steep rise in onshore shale drilling has helped make the United States the world's top producer, with crude production C-OUT-T-EIA up 2 million barrels per day (bpd.) a year ago to a world record 11.7 million bpd. U.S. inventories are near their lowest level in nearly two months. Oil refiners in the world's top crude-importing region are racing against the clock to restart and ramp-up purchases from Iran before U.S. President Donald Trump has a chance to change his mind.

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