Oil prices rise on Opec output cuts and hopes of easing US-China trade tensions

Record US production of 11.9 million bpd undermines Opec efforts

Opec, along with some other producers including Russia, had cut oil output sharply in December before a new accord to limit supply took effect on January 1. Reuters

Oil prices rose on Friday after a report from Opec showed its production fell sharply in December, last year, easing fears about prolonged oversupply.

A report by The Wall Street Journal saying that Washington was considering lifting some or all tariffs imposed on Chinese imports also buoyed financial markets, including oil, analysts said.

US West Texas Intermediate (WTI) crude futures were at $52.62 per barrel, up 55 cents or 1.1 per cent, from their last settlement.

International Brent crude oil futures were up 54 cents or 0.9 per cent, at $61.72 per barrel.

Opec, along with some other producers including Russia, had cut oil output sharply in December before a new accord to limit supply took effect on January 1, suggesting that producers have made a strong start to averting a glut in 2019 as a slowing economy curbs demand.

Opec said in its monthly report that its oil output fell by 751,000 barrels per day (bpd) in December to 31.58 million bpd, the biggest month-on-month drop in almost two years.

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But tempering that support for prices, Opec also cut its forecast for average daily demand for its crude in 2019 to 30.83 million bpd, down 910,000 bpd from the 2018 average.

Undermining Opec's efforts to tighten oil markets has been a surge in crude output from the US, which increased by more than 2 million bpd in the last year to an unprecedented 11.9 million bpd.

"Though Opec reports are likely to bolster market sentiment for stronger oil prices in the near-term, we remain cautious in the longer run amidst persistent economic weakness and incremental US shale production," Benjamin Lu of Singapore-based brokerage Phillip Futures said in a note.