Published: Mon, December 03, 2018
Business | By Eloise Houston

Oil prices surge more than 5-pct

Oil prices surge more than 5-pct

So far, the oil-producing Middle-East group has organized a new plan of supply cuts that would generate some hope to uphold crude futures.

Russian President Vladimir Putin said Saturday he and Crown Prince Mohammed bin Salman "have agreed to extend our agreement" to limit production as prices slump on global markets.

The chief market analyst at XTB, David Cheetham, stated: "Speculation is mounting that Opec will deliver an output cut when they convene for their bi-annual meeting in Vienna next week, but whether it will be enough to stem the slide remains unknown".

U.S. West Texas Intermediate and worldwide benchmark Brent crude oil futures spiked higher early Monday after the United States and China agreed to a 90-day truce in their trade war over the week-end at the G20 summit in Argentina. Technical teams are working on the level of the cuts necessary and the reference baseline for the reduction, he said.

"I explained to (Suarez) the results of the OPEC+ agreement on the stability of oil markets, which serves the interests of producers, consumers and investors and supports the global economy", he wrote.

The unity Putin and the Saudi crown prince showed at the G-20 meeting amid all the controversies shifted the momentum in favor of a new agreement, said Ildar Davletshin, an oil and gas analyst at Wood & Co.

The U.S. output surge will weigh heavily in discussions this weekend at the G-20 summit as well as at next week's meeting of OPEC and its allies.

Both main contracts have plunged by about a third since hitting four-year highs at the start of October, hit by a number of factors including easing demand, high production, softer-than-expected USA sanctions on Iran and a global growth slowdown.

That growing belief saw oil prices trim early falls on Friday. The contract rose 1.1 percent from last week.

By the close of Friday's session, West Texas Intermediate crude for January delivery in NY ended down 1% at $US50.93 a barrel after trading as low as $US49.65.

At 0846 GMT, January WTI crude oil futures are trading $53.38, up $2.45 or +4.81% and February Brent crude oil is at $62.08, up $2.62 or +4.44%.

However, WTI prices plunged by roughly 22% in November, according to Dow Jones Market Data, after trading at a four-year high as recently as early October.

There was no immediate word from the Saudis, but financial markets have been expecting the deal to be renewed between the kingdom and non-OPEC member Russian Federation as the cartel prepares to meet next week in Vienna.

Friday saw Baker Hughes report that the number of active domestic rigs drilling for oil rose by 2 to 887 last week. US crude oil imports averaged 8.2 million barrels per day, up by 608,000 barrels per day from the previous week.

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