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Crude Oil Prices - Weekly Outlook: January 7 - 11

Published 01/06/2019, 08:23 AM
Updated 01/06/2019, 08:23 AM
© Reuters. - In the week ahead, oil traders will continue to monitor developments in U.S.-China trade talks while supply levels will also continue to capture market attention after signs of falling supply last week supported prices.

The Organization of the Petroleum Exporting Countries cut crude output in December, a Reuters survey showed, and the American Petroleum Institute reported a 4.5 million-barrel drop in crude inventories.

Sentiment was also boosted when China confirmed that trade talks with the U.S. would be held in Beijing on Jan. 7-8 and after a survey showed China's services sector expanded in December, bucking a trend of downbeat economic data.

"Recent Chinese data is not confirming the doom-and-gloom trend," said Olivier Jakob, oil analyst at Petromatrix. "And you've got OPEC cutting."

West Texas Intermediate crude rose $1.22 cents, or 2.59%, on Friday to settle at $48.31 a barrel by close of trade on the New York Mercantile Exchange. For the week, the U.S. benchmark gained 6.57%.

Global benchmark Brent crude was up $1.46, or 2.61% to end at $57.41 a barrel. It jumped 9.98% for the week.

Both oil benchmarks posted solid gains in the first week of 2019 trading despite rising concerns that the China-U.S. trade war will lead to a global economic slowdown.

The two nations have been locked in a trade war for much of the past year, disrupting the flow of hundreds of billions of dollars’ worth of goods and raising concern of slowing growth.

Despite the demand-side worries, oil has received some support as supply cuts announced by the global coalition of producers known as OPEC+ kick in.

OPEC, Russia and other non-members agreed in December to reduce supply by 1.2 million barrels per day (bpd) in 2019. OPEC's share of that cut is 800,000 bpd.

The Reuters survey on Thursday found OPEC supply fell by 460,000 bpd in December, following assessments by Bloomberg and JBC Energy also showing a sizeable decline.

The focus now will be on whether producers deliver further curbs in January to implement the deal fully. Iraq, a laggard in reducing production in the last OPEC cutback, said on Friday it would stick to the new accord.

"The market is likely to take some comfort from the fact that crude oil production from the OPEC+ will continue to drop," said Ole Hansen of Saxo Bank.

"Sentiment, however, is weak with (U.S. President Donald) Trump's trade war with China a major hurdle."

Ahead of the coming week, has compiled a list of the main events likely to affect the oil market.

Tuesday, January 8

The American Petroleum Institute is to publish its weekly update on U.S. oil supplies.

Wednesday, January 9

The U.S. Energy Information Administration will release its weekly report on oil stockpiles.

Friday, January 11

Baker Hughes will release weekly data on the U.S. oil rig count.

-- Reuters contributed to this report

Latest comments

In the same time, the alternative energies conquer the market. The units of delivered electric vehicles are growing fast (See GM, Tesla, Toyota, BMW, VW). The fight against pollution and climate change made Europe to restrict diesel engines for small vehicles where few producers already stopped the production of diesel cars. And this is only the beginning! All of these will beat the Arabian and OPEC show even if all of them will reduce the oil production with 1 million bpd per day and that's impossible!
More of these, in April 2018 ConocoPhillips Alaska has announced a North American drilling landmark as North Slope producers push efforts to tap oil as efficiently as possible after years of low oil prices. The company set the continent's land-based record with a four-mile horizontal lateral drilling as an extension branching off a vertical well, the ConocoPhillips said in a statement.The record, at 21,478 feet, beat a 19,500 feet horizontal lateral in Ohio announced in 2017 by Eclipse Resources.The record came at a well at the company's CD5 field, the first commercially producing field within the National Petroleum Reserve-Alaska.
The worst thing is the most traders are controlled by sentiment and by Fibonacci or other relative technic indicators. You'll see next week the reality. This few positive events boosted by technical forecasters are not fundamentals and are based on not proved words. My forecast is always based on quantitative and real data!
Btw ... General Electric is one more significant player!
Did you know that the Friday closed 8 rigs from Baker and Hughes are 4 vertical, 4 directional and none horizontal? In the same time Canada opened 8 fresh horizontal rigs! For this economic reason Iran already sales with $45 the oil barrel! And this is Now now, not in the Futures market!
After Iran economic drama due to embargo, when neither US nor Canada or Russia will not decrease the oil production, when everybody boost only positive data when all fundamental numbers are in the oposite way what do y'all expect for?
Lol ... how small is the world. Ole Hansen knows me from some opinions changed few years ago in exactly the same situation: I said oil price will drop, he said oil price will jump. Ole, if you ever read and remember that time and my punctual analysis, let me tell now it is worst: the production increased and will increase with a much faster rate than will increase the demand! But you know already these :)))
yep. isn't it a thing of beauty?
what next tomorrow market up or down
...then up. ...and down again... and up some more.
Saudi is loosing its market share.
In the trade war, when Dollar drops, oil and gold rises..
how ever I don't understand the relationship between The trade war ( US and China) and oil prices, please explain
all is just Trump drama, now he is raising concerns on Mexico boarder wall, I m fully confirmed that he will raise another new issue after these coz he is so weak with his previous history so he is just diverting ppl.
Both oil benchmarks posted solid gains in the first week of 2019 trading despite rising concerns that the China-U.S. trade war will lead to a global economic slowdown.
Why Trump tells to markets or to Fed what to do? Simple: personal scopes, lack of diplomacy and poor experience! The trade war and the wall aren't his goals? This is the price US must pay it for their President and Democracy with volatility! :)
I see the value of oil increase. with the cuts in oil supply it will be really interesting to see what comes next
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