Oil prices rose on Friday after the Organization of Petroleum Exporting Countries (OPEC) reported a sharp drop in its crude production, allaying worries about prolonged oversupply.
In addition, markets, including oil, had support after a Wall Street Journal (WSJ) report that the US was weighing lifting some or all the duties levied on Chinese imports, according to Thomson Reuters, citing analysts.
By 8:09 am GMT, international benchmark Brent futures rose 0.93% to $61.75 per barrel (pb), while US Nymex crude futures climbed 1.04% to $52.61 pb.
OPEC, along with other producers including Russia, seemed to get a jump on their agreement to withhold supply, which took effect on 1 January, trimming their oil output sharply last December.
Oil production was slashed by 751,000 barrels per day (bpd) last month to 31.58 million bpd, the largest monthly decline in two years, the producer club said.
Some focus diverted to whether the US tightens its sanctions against Iran, after the waivers granted to the oil-rich nation’s eight largest crude importers last November expire.
Washington granted China, India, Japan, South Korea, Turkey, Italy, Greece, and Taiwan waivers, permitting them to purchase oil barrels from Iran until April or May.
China, India, Japan, South Korea and Turkey may receive extended exemptions, while those for Greece, Taiwan and Italy would duly end, removing around 1.1million bpd from Iran’s crude exports, political risk advisory Eurasia Group told Reuters.
“The combination of production cuts by OPEC+ [particularly Saudi Arabia] and tightening sanctions on Iranian oil exports have brought the market close to balance,” US investment bank Jefferies said.
However, gains were capped by stuttering demand, while OPEC lowered its projection for average daily demand for its output this year to 30.83 million bpd, down 910,000 bpd from last year’s average.
Furthermore, the producer group’s push to tighten oil markets were subdued by a climb in production in the US, as it surged by more than 2million bpd in the last year to an unprecedented 11.9 million bpd.
This article provided by NewsEdge.