Crude oil prices rise, boosted by OPEC cuts, market gains

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Last week, a survey from Reuters showed oil output from OPEC fell by 530,000 barrels a day to 32.6 million a day in December, marking the sharpest pullback since January 2017 as top exporter Saudi Arabia throttled back production.

Futures in NY rose as much as 1.6 per cent on Monday following six days of gains, the longest streak of increases since July 2017. Meanwhile, U.S. crude inventories were estimated to have declined.

Crude is seeing a tentative recovery after fears of oversupply and weakening global growth drove prices to their worst annual slump since 2015.

On Monday, U.S. Commerce Secretary Wilbur Ross and China's foreign ministry expressed optimism on resolving the dispute. A resolution has widely been viewed as potentially supportive to crude prices because tariff spats have helped to hamstring expansion in the world's second-largest economy China, also one of the biggest importers of crude.

"Moreover OPEC, particularly Saudi Arabia and Russian Federation, were producing at record levels to offset what was expected to be a meaningful reduction in global supply due to the Iranian economic sanctions".

International Brent crude futures were at $57.42 per barrel at 0742 GMT, up 9 cents, or 0.2 per cent from their last close. "They can be very convincing when they choose to be".

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US crude inventories at Cushing, Oklahoma, the delivery point for USA crude futures, fell by 565,000 barrels from last Tuesday to Friday, traders said, citing data from market intelligence firm Genscape.

Brent crude futures for February are up $1.71, or 3%, at $58.76 a barrel.

Today's early price action suggests investors are pricing in bullish news from the trade talks. The change in assumptions come after Brent plunged from a peak of United States dollars 86 a barrel in early October to briefly trade below USD 50 a barrel at the end of December.

Moody's also raised similar concerns about the effectiveness of Opec's output cuts and ability to maintain compliance this year, as the reduction comes after already record-high production by Saudi Arabia and Russian Federation. A steep rise in onshore shale drilling has helped make the United States the world's top producer, with crude production C-OUT-T-EIA up 2 million barrels per day (bpd) previous year to a world record 11.7 million bpd. U.S. inventories are near their lowest level in nearly two months. Heavy Canadian crude surged to the strongest level in more than a year as rail shipments keep rising even as production was curtailed.

Friday's better-than-expected jobs report, with 312,000 jobs created in December, helped to underscore strength in the US economy, assuaging some fears of an imminent recession in world's largest economy, along with market-supportive comments from the Federal Reserve.

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