Oil scales up on hopes of easing in US-China tensions, OPEC output cuts

January 18, 2019: Oil prices rose on the China-US tariffs report and after OPEC said it had cut output in December before a new agreement to limit supply took effect.

Both main contracts are up around a fifth since the end of December, thanks to an agreement to cut output by OPEC and other key producers including Russia. That followed almost three months of losses that wiped around 40 percent off prices that was fueled by supply and demand worries.

And while the commodity is on the up, there are still concerns about the impact of a slowing global economy.

"As global growth stalls so does the appetite for crude," said Esparza at OANDA. "Demand remains the biggest uncertainty. Positive trade headlines could boost energy prices as supply remains a tug-o-war between rising (US) shale production and OPEC agreed limits."

Saudi Arabia demonstrated its resolve to lift oil prices by slashing output ahead of the entry into force of new pact limiting production while Russia boosted output to a record level, the International Energy Agency said Friday.

In its latest monthly report, the Paris-based International Energy Agency said the Saudis took the lead by cutting output in December as prices tumbled by more than a third in just two months.

"Recently, leading producers have restated their commitment to cut output and data show that words were transformed into actions," said the IEA.

"While Saudi Arabia is determined to protect its price aspirations by delivering substantial production cuts, there is less clarity with regard to its Russian partner," it added.

 (APP)