Oil prices up 5% after trade truce, expected cuts
Oil prices soared by around 5 per cent yesterday after the US and China agreed to a 90-day truce in their trade war, and ahead of a meeting this week by the Organisation of Petroleum Exporting Countries (Opec) that is expected to result in a supply cut.
US West Texas Intermediate crude futures were at US$53.41 (S$73) a barrel, up US$2.48 a barrel, or 4.9 per cent from their last close.
US crude prices were further pushed up by an announcement from Canada that Alberta province will force producers to cut output by 8.7 per cent, or 325,000 barrels per day (bpd), to deal with a pipeline bottleneck that has led to crude building up in storage. Most of Alberta's oil is exported to the US.
Mr Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda, said Alberta's decision was "an unprecedented step to ease a crisis in the Canadian energy industry".
International Brent crude oil futures were up US$2.89 a barrel, or 4.9 per cent, at US$62.35 a barrel.
Traders also said the positive sentiment of the US-China trade truce was also driving crude markets.
Oil traders are eyeing a meeting by the Opec on Thursday. The group, along with non-Opec member Russia, is expected to announce cuts aimed at reining in a production overhang that has pulled down crude prices by around a third since October.
Analysts expect a reduction of 1 million to 1.4 million bpd versus October levels.
Qatar said yesterday it would leave the producer group in January. Its oil production is only around 600,000 bpd, while it is the world's biggest exporter of liquefied natural gas.
It has also been at loggerheads with its much bigger neighbour and de facto Opec leader Saudi Arabia.
Russian oil output stood at 11.37 million bpd last month, down from a post-Soviet record of 11.41 million bpd it reached in October, Energy Ministry data showed on Sunday.- REUTERS