Oil Rises to $51 After Steep Slide

By Alex Lawler
Wednesday, December 26, 2018

Oil rose to $51 a barrel on Wednesday on perceptions that a price slide to 2017 lows prompted by economic worries had been overdone amid an OPEC-led effort to tighten supply.

Crude has been caught up in wider financial market weakness as the U.S. government shutdown, higher U.S. interest rates and the U.S.-China trade dispute unnerved investors and exacerbated worries over global growth.

Brent crude, the global benchmark, was up 70 cents at $51.17 at 1120 GMT. It earlier fell to $49.93, the lowest since July 2017, and posted a 6.2 percent slide in the previous session.

U.S. crude was up 68 cents at $43.21.

"I think there is a little bit of over-extension to the downside linked to global market fears," said Olivier Jakob, analyst at Petromatrix. "It's all about equities."

"OPEC has shown it wants a higher prices and is working towards that goal."

Trade was thin due to the Christmas holidays. Asian stock markets retreated again on Wednesday. Markets in Britain, Germany and France will remain closed on Wednesday.

While economic worries have weighed, the outlook is not as weak as in 2016 when a supply glut built up, because the Organization of the Petroleum Exporting Countries this time is trying to prop up the market, Jakob said.

Concerned that a new glut could form, OPEC and its allies including Russia decided earlier this month to return to a policy of cutting production in 2019, unwinding a decision taken in June 2018 to pump more oil.

The producers' alliance, known as OPEC+, plans to lower output by 1.2 million barrels per day, of which OPEC's share is 800,000 bpd, next year, and some ministers have even suggested taking further action.

Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said some buying interest had returned after firmer trading in U.S. equity futures.

But, he added, economic worries will continue to weigh unless OPEC reassures the market as to the viability of the supply cuts and "even imposes deeper ones as some members have suggested".


(Additional reporting by Jane Chung and Naveen Thukral; Editing by Gareth Jones)

Categories: Finance Energy Oil Production

Related Stories

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

BW Opal FPSO Vessel set for Work off Australia

Petrovietnam, Petronas Extend PSC for Offshore Block

INEOS Wraps Up Acquisition of CNOOC’s US Oil and Gas Assets

CNOOC Starts Production at Two New Oil and Gas Projects

Shell Launches Next Phase of Malaysia's Deepwater Project with First Oil Production

Current News

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com