U.S. WTI April crude oil futures electronic disk closed Monday (March 4) up $0.65, or 1.16%, to $56.45 a barrel. U.S. oil rose more than 1% on Monday as the United States and China appeared close to ending a trade dispute that has dragged down global economic growth, while Russia, an ally of the Organization of Petroleum Exporting Countries (OPEC), said it would step up production cuts.
Meanwhile, ICE Brent crude oil futures electronic disk closed up $0.53, or 0.81%, at $65.60 a barrel in May.
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Optimistic Prospects of Sino-US Trade Negotiations Boost Oil Prices
A source who listened to the briefing on the talks said Sunday that China and the United States seemed close to reaching an agreement and that the U.S. tariffs on at least $200 billion of Chinese goods were expected to be withdrawn.
Bob Yawger, head of Mizuho Energy Futures, said the bottom line was optimism about the trade situation. Russian Oil Minister Nowak’s remarks that he would reach a cut-off level by the end of March also helped boost the market.
The news that Russia plans to increase its output cuts is good for oil prices
Russia’s energy minister, Nowak, said the country planned to accelerate crude oil production cuts this month. Russia is OPEC’s largest non-member country ally.
OPEC sources said that OPEC and its allies, the so-called OPEC+, might decide on a new production policy in June rather than at the Vienna Conference in April.
The source said that OPEC + is expected to extend the production reduction plan at the June meeting, but mainly depends on the extent of sanctions imposed by the United States on OPEC member states Iran and Venezuela.
The survey showed that OPEC crude oil supply fell to a four-year low in February, as Saudi Arabia, the main exporter, cut production more than it had previously promised, and the U.S. oil sanctions against Venezuela came into effect. The survey is one of several estimates of OPEC’s official production data before it is released. OPEC’s data will be published in the monthly report next week.
OPEC’s decision to cut production has boosted oil prices by more than 20% this year.
US crude oil production shows signs of slowing down
In the United States, there are signs that oil production boom may slow down in the past few years. U.S. energy companies last week cut the number of oil rigs looking for new reserves to the lowest level in nearly nine months, and some oil producers are also implementing spending cuts.
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The first U.S. energy unit data for November showed that U.S. oil production fell in December after soaring in November, but still higher than previously predicted.
In the week ending February 26, hedge funds and other fund managers increased Brent’s net long position by 15887 to 291 336.
Dutch International Group said that although the main reason for the rise in the market is short covering, in recent weeks, we have seen new bulls returning to the market, indicating that market sentiment is becoming more positive.
But demand pressures may limit further increases in oil prices. Bjarne Schieldrop, chief commodity analyst at SEB Bank, said refineries were now undergoing repairs, which meant a reduction in crude oil supply and weak spot crude oil prices.
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