Published: Tue, January 22, 2019
Finance | By Jaime Brady

Brent oil rises to $63.00 on upbeat China factory data

Brent oil rises to $63.00 on upbeat China factory data

Meanwhile, US factory output expanded by the most in 10 months and the International Energy Agency forecast another year of growth in oil demand. News about China's stimulus measures might ease some of the concerns.

The IEA said global oil supply last month fell by 950,000 bpd, roughly 1 percent, led by lower OPEC output even before the organization's new supply-cutting pact took effect in January.

West Texas Intermediate ended Friday's session up $1.73, or 3.3 percent, at $53.80 per barrel, while Brent rose $1.50, or 2.5 percent, at $62.68 per barrel; these are the best closing since November 21 and December 7, respectively, and Friday's activity also enabled oil to post a third consecutive week of gains.

In response to the drop in price in the second half of last year, OPEC and non-members plan to cut production by a joint 1.2 million bpd this year.

"We have seen prices fall very significantly since the peak at the beginning of October, and that is providing some relief to consumers", Neil Atkinson, head of the IEA's oil industry and markets division, said in a Bloomberg television interview on Friday. As of writing this article, Spot Crude oil WTIUSD is trading at $52.74 per barrel up by 1.07% on the day.

"The combination of production cuts by OPEC+ (especially the Saudis) and tightening sanctions on Iranian oil exports have brought the market close to balance", US investment bank Jefferies said. Refinery utilization rates fell by 1.5 percentage points.

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World benchmark Brent crude oil will average $61 per barrel in 2019 and $65 in 2020, according to the U.S. Energy Information Administration's January Short-Term Energy Outlook released on Wednesday.

At the moment the United States has no intention of granting any further sanction waivers to Iran crude oil buyers.

Saudi Arabia demonstrated its resolve to lift oil prices by slashing output ahead of the entry into force of new pact limiting production while Russian Federation boosted output to a record level, the International Energy Agency said Friday. At the same time, the shale-oil boom is continuing unabated in the USA, which by the middle of the year will be producing more crude than either Saudi Arabia or Russian Federation is able to.

The decline in Venezuelan production has also slowed, while more growth is expected in the USA where liquids production increased by an "incredible and unexpected" 2.1 million barrels a day in 2018, the IEA said. "The US, which is already the largest liquids producer, will become at the beginning of 2019 the largest crude oil producer before Russian Federation and Saudi Arabia thanks to its unconventional crudes".

Earlier in the week, Saudi Energy Minister Khalid Al-Falih said he's confident the cuts will have a "strong impact" on the market.

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