Oil prices up on U.S.-China trade talk optimism

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"Absent such a large slowdown, we expect prices to recover further, although growth uncertainty will likely require strengthening physical oil markets to drive this rally, with encouraging evidence that the OPEC cuts are starting".

Futures in NY increased as much as 1.6 percent following six days of gains, the longest streak of increases since July 2017.

The U.S. and China are also entering what could be called round two of its existing trade war, kicked off mid-last year when President Trump slapped fresh tariffs on Chinese goods.

Brent crude, the global benchmark, was trading 2.5 per cent up at $58.60 a barrel last night as officials from the two countries began talks yesterday. Investors pulled $98 billion from USA based stocks last month, in what shows a growing lack of confidence in economic growth, as well as worries over the Federal Reserve's recent policy of increasing interest rates.

Crude is seeing a tentative recovery after fears of oversupply and weakening global growth drove prices to their worst annual slump since 2015. Meanwhile, crude oil output in the United States is expected to rise by a further 1mln barrels per day in 2019, with capacity constraints envisioned to ease in the second half of the year as new pipelines come onstream,"the WB says in the report".

Oil's uptick is also due to recent reports that said supply levels dropped last week. Prices are rebounding as the Organization of Petroleum Exporting Countries and its allies start their pledged production cuts this month, and after the U.S. Federal Reserve signaled a hold in its interest-rate hikes that had spurred risk aversion and volatility across global financial markets. In December, OPEC oil supply fell by the largest amount in almost two years.

The West Texas Intermediate for February delivery increased 0.56 US dollar to settle at 48.52 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery rose 0.27 dollar to close at 57.33 dollars a barrel on the London ICE Futures Exchange.

U.S. West Texas Intermediate (WTI) crude oil futures climbed 59 cents, 1.22 percent, to $49.11 per barrel.

As a result, USA crude oil production C-OUT-T-EIA rose by a whopping 2 million barrels per day (bpd) a year ago to a world record 11.7 million bpd. United States inventories are near their lowest level in nearly two months.

Last week, a survey from Reuters showed oil output from OPEC fell by 530,000 barrels a day to 32.6 million a day in December, marking the sharpest pullback since January 2017 as top exporter Saudi Arabia throttled back production.

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