Economy

OPEC oil production drops in December to a 6-month low

OPEC oil production drops in December to a 6-month low

Oil closed at a three-week high as US negotiators touted progress in trade talks with China and investors gained faith that OPEC will shrink output.

Futures in NY increased as much as 1.9% following six days of gains, the longest streak of increases since July 2017.

There's a "very good chance" the USA gets a reasonable deal with China, Commerce Secretary Wilbur Ross told CNBC on Monday, as trade negotiations began in Beijing. Investors pulled $98 billion from US based stocks last month, in what shows a growing lack of confidence in economic growth, as well as worries over the Federal Reserve's recent policy of increasing interest rates.

Crude's taking a respite after closing the worst year since 2015 on fears of oversupply and weakening global growth.

The talks are going well so far and will continue on Wednesday, U.S. delegation member Steven Winberg said.

Global equity markets are entering the New Year in the doldrums and are spooking traders and investors alike, closely mirroring the decline in manufacturing growth in both the US and China amid ongoing trade tensions.

"In the last few months of 2018, the tensions between fundamentals, sentiment and prospects about the macro environment all shaped price behaviour and this will continue in 2019", it added in its report.

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Beyond politics, oil markets are being supported by supply cuts started late a year ago by a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russian Federation.

Specifically, net-long positions in Brent (the difference between bets on a price increase and wagers on a drop) fell by 6.1 percent in the week ended January 1, according to data from ICE Futures Europe exchange. "They can be very convincing when they choose to be".

Brent and U.S. crude both pushing higher.

Crude oil prices were slightly down at the start of trading on Tuesday, despite reports that Saudi Arabia cut its crude exports to help boost prices. US West Texas Intermediate (WTI) crude oil futures were at $48.56 per barrel, up 4 cents, or 0.1 per cent.

American crude stockpiles probably declined by 1.75 million barrels last week, according to a median estimate in a Bloomberg survey of analysts ahead of USA government data today.

Rising production from North American shale basins, particularly the USA, which surged past 11 million bpd in August, outpaced sovereign producers Saudi Arabia and Russian Federation and was one of the factors behind the market's oversupply, the report said.