Reuters survey: Saudi Arabia may cut February heavy crude prices to Asia

Oil prices reverse course and trade sharply higher

Oil prices surge 5%

The positive finish was helped by a Bloomberg survey that suggested OPEC's December production had the largest month-on-month drop in nearly two years.

The global benchmark is on track for an 9.3 percent advance this week after rebounding Friday from earlier losses.

At a meeting in December, OPEC and some nonmember producers, including Russian Federation, agreed to cut production by 1.2 million barrels from October 2018 levels, effective as of January 2019, for an initial period of six months.

"Market expectations for continued strong oil demand growth remain in place, despite concerns about slowing demand growth as a result of weaker economic growth, the impact of tariffs and a strong USA dollar", remraked Steve Wood, the managing director for Oil & Gas at Moody's.

"Underpinning this wave of buying is mounting evidence that Saudi Arabia has taken an axe to its oil production", said Stephen Brennock, an analyst at PVM Oil Associates Ltd.

The United States has been imported less crude oil altogether-not just less OPEC crude.

However, much depends on relentless growth in non-OPEC supply (notably the US). This will reduce output by 1.2 million barrels per day.

The value of a WTI crude futures contract for February delivery on the New York Mercantile Exchange (NYMEX) rose by $1.13, to $46.54 a barrel.

After the news the price of WTI bounced to a high of 47.45 more than five dollars a barrel higher than the Christmas Eve 2018, 42.40 lows. The March contract traded at a discount of $8.68 to Brent.

Cesc Fabregas misses penalty in 'final Chelsea appearance'
An emotional Cesc Fàbregas broke down in tears after he was substituted off the pitch in what could be his final Chelsea match . He nearly capped off the performance with a goal from the penalty spot, but his effort was saved by Luke Steele .

"During that interim period you are going to have all sorts of variables, like the trade war, like slower economic growth, like the White House and whether President Trump is going to tweet for lower oil prices every 24 hours." says Wallace. That's the sharpest pullback since January 2017 when OPEC started on its strategy to clear a glut created by surging supplies from shale producers.

Oil fell in early trading, fueled by concerns about the global economy and its potential impact on demand for crude. Optimism that the US and China are working toward a thaw in trade tensions has helped bolster prices.

Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries, and several others curbed supplies in the face of rising United States production and inventories, analysts said.

Data for December from the Institute for Supply Management (ISM) on Thursday showed the broadest USA slowdown in growth in a decade.

Considering the planned cuts versus ongoing increases in USA crude production, which hit a record 11.7-million barrels a day by late 2018, FGE said it expected Brent prices to range between $55 and $60 a barrel in the first months of 2019.

US crude stockpiles were little changed. That would be a sixth consecutive weekly increase if confirmed by government data on Friday.

Four oil refiners participated in the survey.

A 15-cent drop in the price spread between the first and third month DME Oman crude futures may also prompt Saudi Arabia to lower OSPs.

A robust report also added to broader market optimism.

Latest News