Published: Wed, January 09, 2019
Business | By Eloise Houston

Bullish Traders Need Positive Trade Talk News to Sustain Rally

Bullish Traders Need Positive Trade Talk News to Sustain Rally

Brent crude futures were up 1.3 percent at $57.77 per barrel, as of 0512 GMT, while WTI prices were at $48.72 per barrel, up 1.6 percent. Oil futures have gained more than 7 percent since last Monday. Data showed that stockpiles at Cushing, Oklahoma, a key delivery hub for US crude futures, decreased by 565,000 barrels from December 3 to December 4, according to Genscape, a USA global commodity and energy markets intelligence firm.

"Momentum is coming back into the market from very depressed price levels", Petromatrix strategist Olivier Jakob said.

Crude oil prices were slightly down at the start of trading on Tuesday, despite reports that Saudi Arabia cut its crude exports to help boost prices.

Apicorp noted that the cuts to production undertaken by Opec and allies may not be sufficient to balance the market, which may see build up of inventory levels, particularly as United States shale is expected to top 12 million bpd during the second half of the year.

The oil prices in 2018 saw the highest peak till October before giving up and depleting to the lowest value in the past year.

Because of record USA crude oil production C-OUT-T-EIA of 11.7 million bpd, American fuel stockpiles are rising, according to weekly data by the Energy Information Administration (EIA).

The API was also said to report that USA crude inventories fell by 6.13 MMbbl last week.

Monday found Bloomberg in a similarly gloomy mood: the news agency noted that just as oil prices are recovering, "money managers' net-long bets on rising Brent crude prices fell for the first time in a month", plus "wagers on a Brent sell-off also jumped, leaving overall sentiment near its most bearish level since 2015".

"Surely, there will be more twists and turns in the saga and increasing US tariffs on Chinese goods after March from 10 percent to 25 percent can not be excluded", Tamas Varga of PVM Oil Associates said.

Trade tensions pose the threat of hurting demand for oil, dragging prices, which have already been battered in recent months, further down. Shares have risen on expectations that trade talks this week between the United States and China will ease a trade dispute. The ongoing spat has weighed on global growth, pushing oil sharply lower in the last few months.

S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $55 for Brent and $50 per barrel for WTI.

"Crude oil prices have benefited from OPEC production cuts and steadying equities markets", said Mithun Fernando, investment analyst at Australia's Rivkin Securities.

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