Oil prices up on U.S.-China trade talk optimism

Oil prices up on U.S.-China trade talk optimism

The energy alliance between kingpin and non-OPEC heavyweight faces its "toughest test yet" next week, analysts have told CNBC, ahead of a much-anticipated meeting between the influential oil cartel and its allies. The softer tone from the U.S. Federal Reserve last week buoyed global equities, reducing fear that steadily tightening monetary conditions would push the global economy into recession.

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.

West Texas Intermediate (WTI) for February delivery increased as much as 77 USA cents to US$49.29 a barrel on the New York Mercantile Exchange.

Oil extended its longest run of daily gains in 17 months on renewed efforts by the US and China to reach a trade deal, and expectations the market will be tightened by OPEC's output cuts. Prices drew support from a Wall Street Journal report saying that Saudi Arabia is planning to cut crude exports to around 7.1 million barrels per day (bpd) by the end of January.

"Spot prices will continue to recover with Brent backwardation set to return by summer as inventories eventually revert to 5-year average levels".

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The owner of Curtis Accounting and Tax Services said there will nearly certainly be a delay in processing returns. If the shutdown lasts much longer, the IRS will likely have to make more and more changes on the spot.

PRICE Futures Group senior analyst Phil Flynn on the outlook for oil prices and the impact on the USA soybean market from the tariff tensions with China.

"When stock markets are strong oil usually follows suit", PVM Oil Associates strategist Tamas Varga said. Meanwhile, crude oil output in the United States is expected to rise by a further 1mln barrels per day in 2019, with capacity constraints envisioned to ease in the second half of the year as new pipelines come onstream,"the WB says in the report". -China trade tensions. The company's shares dropped 10 percent after the disclosure.

Crude prices so far in 2019 have been buoyed by supply cuts from the Organization of the Petroleum Exporting Countries including top exporter Saudi Arabia, as well as non-member Russian Federation. Though it will enjoy a portion of support from the lower oil prices, the comprehensive economic growth across the world may slow down significantly, resulting in tumbling market conditions.

Record high crude oil production has also pushed up United States inventories, which rose by almost 17 per cent in 2018 to their highest in well over a year, according to weekly data by the Energy Information Administration (EIA) on Friday. Societe Generale cut its 2019 oil price forecast for Brent by $9 to $64 a barrel and reduced its forecast for United States light crude by $9 to $57 a barrel.

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