Crude oil futures were higher during Friday mid-morning trade in Asia following OPEC’s monthly report signaling more production cuts, bolstering market sentiment. At 11:20 am Singapore time (0320 GMT), ICE March Brent crude oil futures was up 54 cents/b (0.88%) from Thursday’s settle to $61.72/b, while the NYMEX February light sweet crude contract was 60 cents/b (1.15%) higher at $52.67/b.
In its monthly report on the oil market out on Thursday, OPEC said it had slashed its crude output by some 750,000 b/d month on month in December, but that is only about halfway to the level of cuts needed to avoid a supply glut. The report says that OPEC’s 14 members pumped 31.58 million b/d in December, down from 32.33 million b/d in November. “Positive connotations from the OPEC reports will likely enact for fundamental support levels in oil prices as markets look towards the marked impact of OPEC-led cuts,” Phillip Futures’ investment analyst Benjamin Lu said.
Meanwhile, market participants will continue to keep a close watch on the progress of the US-China trade talks as global trade fears ebbed slightly. “Without further progress on US-China trade talks, it is unlikely that crude can rally significantly from here and should continue trading in a broad range of 50-55,” OCBC analysts said in a note Friday. “Growth remained the central concern for markets and the US-China trade impasse being a key input factor,” IG market strategist Pan Jingyi said.
According to a report in the Wall Street Journal Thursday, US Secretary of the Treasury Steve Mnuchin had proposed lifting some or all tariffs on China in a bid to advance trade talks between the two countries. This lifted market sentiment, adding upward pressure to oil prices. “Asia markets look to relish in the latest indication of further interest from the US to resolve the US-China trade uncertainty … the interest to reopen talks over US-China chicken trade had been reported, encouraging this morning’s moves,” Pan added.