Crude Oil Prices Surge Higher

09 January, 2019, 08:43 | Author: Eric Barnett
  • S&P Global Ratings slashes Brent oil view to USD 55 per barrel in 2019

Meanwhile, the vice ministerial level talks between USA and Chinese officials are scheduled to commence later in the day at Beijing. "Although growth uncertainty will likely require strengthening physical oil markets to drive this rally, with encouraging evidence that the OPEC cuts are starting", the bank added.

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

The oil prices in 2018 saw the highest peak till October before giving up and depleting to the lowest value in the a year ago.

The last time crude rallied for this long was the summer of 2017. Futures for the USA benchmark contract posted the lengthiest win streak since an eight-session period ended July 3, 2017.

West Texas Intermediate crude oil for February delivery CLG9, +0.06% rose $1.26, or 2.6%, to settle at $49.78 a barrel on the New York Mercantile Exchange—the highest finish for a front-month contract since December 17, according to Dow Jones Market Data.

Crude prices have been buoyed by supply cuts from the Organization of the Petroleum Exporting Countries including top exporter Saudi Arabia, and allies including Russian Federation.

A separate government report scheduled for release on Wednesday is expected to show American crude stockpiles declined by 2.7 MMbbl last week, according to the median estimate in a survey of analysts by Bloomberg.

The West Texas Intermediate for February delivery increased 0.56 USA dollar to settle at 48.52 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery rose 0.27 dollar to close at 57.33 dollars a barrel on the London ICE Futures Exchange. The global benchmark crude traded at an $8.61/bbl premium to WTI for the same month.

On Monday, U.S. Commerce Secretary Wilbur Ross and China's foreign ministry expressed optimism on resolving the dispute.

"Saudi Arabia will continue to be the decisive factor for the markets this year, just as they were last year", said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. "Fed's easier stance and Opec's commitment to cut production as well as expectations that inventories should drop are lending a hand to this positive investor sentiment".

As a result, US crude oil production C-OUT-T-EIA rose by a whopping 2 million barrels per day (bpd) previous year to a world record 11.7 million bpd. Nationwide inventories are near their lowest level in nearly two months. "And so we see the potential for Brent crude to go to $70 a barrel over the course of the year".



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