Oil Rises 3%

Oil drum image

CBJ — Oil prices have climbed about 3%, rebounding from an 18-month low in December.Oil futures have gained about 10% over the past week.

The increase in oil prices can be attributed to a cut in OPEC production and more stabilized equity markets.

OPEC oil supply fell in December by 460,000 barrels per day (bpd) to 32.68 million barrels per day.

OPEC and its allies are trying to rein in a surge in global supply, driven mostly by the United States, where production surpassed 11 million bpd in 2018. Record high crude oil production C-OUT-T-EIA has pushed up U.S. inventories.

The U.S. has made it quite clear they will purchase global oil for cheaper prices, but refuse to pay upwards of $110 per barrel. While fracking techniques used in the U.S. are more expensive than conventional methods, it still becomes worthwhile once oil surpasses $65 per barrel, or thereabouts.

Shares have risen on expectations that trade talks this week between the United States and China will ease a trade dispute. Disruptions to trade undermine prospects for economic growth and oil demand.