Oil prices rose on Feb. 22, supported by OPEC’s ongoing supply cuts and hopes that Washington and Beijing may soon end their trade dispute.
International Brent crude futures LCOc1 scaled a new 2019 high of $67.73 a barrel, up 66 cents from close on Feb. 21.
By 1317 GMT, U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 75 cents at $57.71 per barrel, after hitting a new 2019 high of $57.81 earlier on Feb. 22.
Further gains were tempered by U.S. crude oil production hitting a record 12 million barrels per day (MMbbl/d) and a surge in exports from the country.
The broad outline of a possible U.S.-China trade deal was beginning to emerge from talks between the two countries, sources told Reuters on Feb. 21.
The two sides are pushing for an agreement by March 1, the end of a 90-day truce agreed by U.S. President Donald Trump and Chinese President Xi Jinping late last year.
“Yesterday...volume was low and U.S. data on crude and products was mixed, so the market didn’t really react,” Olivier Jakob of Petromatrix consultancy said.
“Anything positive today on trade talks will boost the oil price.”
OPEC and other producers led by Russia agreed in December to cut output by 1.2 MMbbl/d to prevent a large supply overhang from growing.
Surging U.S. crude oil production, which the Energy Information Administration (EIA) said reached 12 MMbbl/d for the first time last week, is partly offsetting the OPEC cuts. The U.S. is the only country to ever reach that level of oil production.
“We see total U.S. crude production hitting 13 million bpd by year-end, with 2019 averaging 12.5 MMbbl/d,” U.S. bank Citi said following the release of the EIA report.
The bank said that some weeks could see 4.6 MMbbl/d of gross crude exports by year-end, topping this week’s record of 3.6 MMbbl/d.
With U.S. supply surging, Goldman Sachs said it expected non-OPEC supply to grow by 1.9 MMbbl/dthis year, more than offsetting the OPEC cuts.
That means much will depend on demand, which Goldman said it expected to grow by 1.4 MMbbl/d this year.
Given the supply and demand picture, Goldman said it expected an average Brent price of $60-$65 per barrel in 2019 and 2020.”
U.S. commercial crude oil inventories rose by 3.7 MMbbl to 454.5 MMbbl last week, the EIA said.
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