Oil Finishing Best Month Strongly Since 2015
Oil headed for its biggest monthly gain since April 2015 as data showed the OPEC+ coalition’s output cuts starting to kick in, while a more dovish Federal Reserve boosted markets and improved the growth outlook.
Futures in New York rose for a third day, taking their advance in January to 20 percent. The Fed signalled on the 30th January that it is done raising rates for the time being, pushing down the dollar.
US imports from Saudi Arabia fell to the lowest since October 2017 last week, while Russian Energy Minister Alexander Novak said the country cut output gradually this month and will try to increase the pace of reductions in February.
The Fed’s more accommodative stance “is seen as pointing to much better global growth prospects over the medium to longer term,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “The Russia and OPEC moves are clearly supportive of prices in the short term.”
The crude benchmark in New York has rebounded this year after plunging almost 40 percent in the last quarter of 2018. Those declines prompted the Organisation of Petroleum Exporting Countries and its allies to embark on a mission to curb output.
The crisis in Venezuela is threatening to limit supplies further if it worsens, while the question of whether the US and China can resolve their trade differences remains pivotal for the demand outlook.
West Texas Intermediate crude for March delivery rose 28 cents to US$54.51 a barrel on the New York Mercantile Exchange at 7:33 am in London. It gained 92 cents on the 30th January to close at US$54.23 and is up US$9.10 so far in January.
Brent for March settlement, which expired on the 31st January, was 42 cents higher at US$62.07 a barrel on the London-based ICE Futures Europe exchange.
Futures have increased 15 percent this month, on course for the biggest gain since April 2016.
The more-active April contract advanced 42 cents to US$61.96. The global benchmark crude was at a US$7.58 premium to WTI.
Output Cuts
US Energy Information Administration data released on the 30th January showed Saudi Arabia shipped the least amount of oil to the US on a weekly basis in about 15 months, the latest evidence the OPEC+ coalition cuts are impacting the market.
Under a plan agreed in December, OPEC+ producers will reduce their output by a combined 1.2 million barrels a day from October levels.
Russia’s average daily oil output this month was 50,000 barrels a day lower than October, Mr Novak said, citing preliminary data. The country has pledged to implement a reduction of 228,000 barrels a day this quarter gradually and maintain the cap until the end of June.
Asian stocks and currencies rose on the 31st January after the Federal Open Market Committee said it “will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate.”
Meanwhile, high-level trade talks between the US and China continued for a second day in Washington on the 31st January. While a breakthrough deal is seen as unlikely from this round of negotiations, the White House has said a concluding statement will be released on the progress they have made on core issues.
Source: Rigzone