OPEC supply cuts drive oil prices higher

OPEC January oil output plunges on new cuts, Libyan unrest

Oil prices rose on Monday due to continued OPEC-led supply cuts, while Brent crude remained below $70 a barrel, amid concerns over the ongoing US-China trade war.

Brent crude oil futures rose by 41 cents or 0.6% to reach $69.10 a barrel from the previous close, according to Reuters.

  • US WTI crude futures rose by 10 cents or 0.2% to $58.73 a barrel.

Despite the rally, gains on Monday did not offset last week’s decline when both crude oil futures posted the biggest price drop in 2019, amid fears that the China-US trade dispute could accelerate an international economic slowdown.

“Sentiment remains fragile and vulnerable to any deterioration in U.S.-China trade frictions,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

  • Brent crude reached $69.10 a barrel

The Organization of the Petroleum Exporting Countries (OPEC) has agreed with independent producers, including Russia, to cut oil production by 1.2 million barrels per day since for six months started on the first of last January, an agreement aimed at stopping the accumulation of inventories and reducing prices.

Saudi Energy Minister, Khalid Al-Faleh said on Saturday that OPEC will respond to the needs of the oil market, pointing out that the data still shows a rise in inventories, especially those from the United States.

Al-Faleh stressed that OPEC will not take any decisions on production before late June, the date of the organization meeting.

“We will be flexible and we will do the same as we always do,” he said, referring to any decision on further production cuts may be taken at June meeting.

Al-Faleh referred to two principles guide OPEC; “One is to keep the market in the direction of equilibrium and return inventories to normal, and second is to be responsive to the needs of the market,” he added; “I am sure we will achieve the right balance.”