Oil prices tried for their fifth straight gain on Friday as stocks looked to get a bounce from renewed trade talks set for next week between the U.S. and China.
Gains Thursday came as separate surveys revealed monthly declines in crude output from major producers. Supply factors play out against a demand backdrop shaped by financial market volatility and signs of economic slowing for major energy consumer China.
Early Friday, West Texas Intermediate crude for February delivery CLG9 added 79 cents, or 1.6% a $47.88 a barrel on the New York Mercantile Exchange. Early-year gains have Front-month WTI crude futures dropped by 24.8% in 2018, according to Dow Jones Market Data.
The global benchmark, March Brent crude UK:LCOG9 added 83 cents, or 1.5%, to $56.80 a barrel on ICE Futures Europe. The international benchmark finished last year with a loss of 19.5%.
Members of the Organization of the Petroleum Exporting Countries produced 32.68 million barrels of oil a day in December, down 460,000 barrels a day from a month earlier, according to a Reuters survey released Thursday. Separately, a Bloomberg survey showedOPEC output down by 530,000 barrels to 32.6 million barrels a day last month. Both surveys pegged the monthly declines as the biggest since January 2017.
The output fall came ahead of the reduction of 1.2 million barrels a day from October 2018 levels pledged by OPEC and nonmember producers, including Russia, that became effective at the start of the new year.
Prices for both benchmarks ended Thursday up a fourth consecutive session, at their highest in roughly two weeks. On Wednesday, WTI and Brent crude climbed by more than 2% after a reported drop in December crude exports emerged from Saudi Arabia.
Oil’s upside has been limited in part by concerns about the global economy, especially after the latest round of worrying statistics out of China, and its potential impact on demand for crude. Demand is also in question as wealth is wiped out of stock markets, the latest blow due to a sales warning from AppleAAPL
AAPL AAPL Meanwhile, major crude producers, including the U.S. and Russia, continued to ramp up output in the second half of 2018. The U.S. Energy Information Administration forecasts American output will rise to 12.1 million barrels a day in 2019, up 1.2 million barrels a day from the previous year.
Data “showing some global producers finished the year pumping at record levels with forecasts for 2019 still pointing to further output growth, especially in the U.S. … further raises concerns about a [supply] surplus lasting into the new year,” said Richey.
On Friday morning, the Energy Information Administration will release its weekly data on U.S. natural-gas supplies, followed by the weekly report on domestic petroleum stockpiles. Both are delayed this week because of Tuesday’s New Year’s Day holiday.
The American Petroleum Institute, a trade group, will release its weekly domestic petroleum inventory report late Thursday, which has also been delayed due to the holiday.
Analysts polled by S&P Global Platts expected the EIA to report a fall of 1.3 million barrels in crude supplies for the week ended Dec. 28, along with increases of 1.6 million barrels each for gasoline and distillate inventories.
SOURCE: MarketWatch.com