Oil prices rise on trade talk optimism, OPEC cuts

Brent and WTI jump almost 3

Goldman cuts 2019 crude price view; sees recovery from current levels

Oil prices continued to rebound on Monday, erasing part of the steep losses in December, as an OPEC-led output cut deal, going into effective this month, has begun to play its role.

Brent crude futures rose $1.39 on the day to $58.45 a barrel by 1224 GMT, up from December's slide below $50, which was its lowest level since July 2017.

Societe Generale cut its 2019 oil price forecast for Brent by $9 to $64 a barrel and reduced its forecast for USA light crude by $9 to $57 a barrel.

"Momentum is coming back into the market from very depressed price levels", Petromatrix strategist Olivier Jakob said. The aim of the OPEC cuts is to rein in a surge in global supply, driven mostly by the United States, where daily oil production grew by almost a fifth to over 11 million bpd in 2018.

Looming over the OPEC-led cuts, however, is a surge in USA oil supply, driven by a steep rise in onshore shale oil drilling and production.

Donald Trump addresses the nation
But mostly Trump still wants his wall, which Democrats describe as immoral as well as no solution to illegal immigration. The number of illegal border crossings is down from 1.6 million in 2000 to less than 400,000 previous year .

Oil futures Tuesday finished higher for a seventh straight session, the longest run of gains in roughly 18 months, with prices lifted by global efforts to curb crude output, as well as measured optimism around U.S.

American crude stockpiles probably declined by 1.75 million barrels last week, according to a median estimate in a Bloomberg survey of analysts ahead of government data on Wednesday. The producers had chose to boost production in May to moderate rallying oil prices amid pressures from the U.S. to push them lower ahead of midterms. USA crude inventories at Cushing, Oklahoma, the delivery point for United States crude futures, fell by 565,000 barrels from last Tuesday to Friday, traders said, citing data from market intelligence firm Genscape. Some of the factors became responsible for a sharp decline in the prices of oil and the experts believe those are not leaving the market soon.

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

US Commerce Secretary Wilbur Ross said late on Monday that Beijing and Washington could reach a trade deal that "we can live with" as dozens of officials from the world's two largest economies held talks in a bid to end their trade dispute that has roiled global markets since past year. Shares have risen on expectations that trade talks this week between the United States and China will ease a trade dispute. "Our lower oil price assumptions reflect slowing demand and rising supply globally", said S&P Global Ratings analyst Danny Huang.

Societe Generale cut its 2019 oil price forecast for Brent by $9 to $64 a barrel and reduced its forecast for USA light crude by $9 to $57 a barrel.

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