Prices of U.S.Crude Oil increased due to OPEC production cuts and the steady equities in markets. Crude oil price increased after a year and a half continued to drop.
U.S. West Texas Intermediate crude oil futures reached 48.52 a barrel on Tuesday. It increased by 1.2 percent or by 56 cents. Brent crude futures crude oil price also increased by 27 cents as it reaches $57.33 per barrel. It recovered from its lowest level since July which is below $50. The company gained by 10 percent which is considered as its biggest week-on-week rally in two years.
Oliver Jakob, a Ptromatrix strategist, said that momentum is coming back into the market from very depressed price levels. He added that the oil industry had five consecutive days of price gains.
The gains in oil price were contributed by agreed supply cut by OPEC. Based on a Reuters survey, In December, OPEC oil supply dropped by 460,000 barrels per day (bpd) to 32.68 million bpd. Cuts from top exporter Saudi Arabia affected the oil price.
Dow Jones reported that Saudi Arabia plans to slash shipments to steady prices and support the country's budget. According to Saudi officials, Saudi plans to decrease its crude exports by about 800,000 bpd from November levels to 7.1 million bpd by the end of this month.
John Kilduff, founding partner at energy hedge fund Again Capital, the oil market jumped all over because of the cuts. He also said that they have been expecting a decrease in exports. He also said that the Saudis are just aggressive about trying to clean up the situation they fell into from oversupplying the market based on the fear of Iran sanctions.
Mostly driven by the United States, OPEC, and its associates plan to dominate the global supply. The United States crude oil production is above 11 million bpd in 2018 and its record-breaking production increased U.S. inventories.
Andrew Lipow, president of Lipow Oil Associates in Houston, said that the oil market continues to rally as the OPEC and non-OPEC production cuts are taking effect which reduced the oversupply situation in the market.
The data from the market intelligence firm Genscape showed that the U.S. crude inventories at Cushing, Oklahoma dropped by 565,000 barrels from last Tuesday to Friday.
Share in the market increased as firms expect that trade talks between the two economic giants will end the trade war. The conflict between the two nations disrupts trade and undermines the possibility of economic growth and oil demand.
