Economy

Oil Prices Rise After Russia, Saudi Arabia Deal

Oil Prices Rise After Russia, Saudi Arabia Deal

Crude oil prices gapped over 3 percent higher at the start of the Asia trading session following a rally in APAC equities.

U.S. West Texas Intermediate and global benchmark Brent crude oil futures spiked higher early Monday after the United States and China agreed to a 90-day truce in their trade war over the week-end at the G20 summit in Argentina. WTI and Brent settled at 50.42 USA dollars and 58.8 dollars per barrel, respectively, at the end of the week. With fears of a scarcity now giving way to worries about oversupply, the Organization of Petroleum Exporting Countries and allies such as Russian Federation are preparing to discuss more cuts when they meet next week in Vienna.

Still, prices finished down 22 percent last month, the deepest slide since October 2008.

Along with a couple of other non-member producers, the OPEC-Russia meeting will be the major event in commodities this week and for the final month of 2018. February Brent settled at $US59.46, down 45 cents, or almost 0.8%. Although Moscow and Riyadh have yet to confirm any fresh cuts, the agreement by the Russian and Saudi leaders over the weekend opens the door for a deal at the OPEC meeting this week in Vienna. Repeated fall in oil prices from past seven weeks has pushed the crude futures downward in a bear market.

To the adoption of this decision calls on Saudi Arabia amid a 30 percent collapse in oil prices towards the beginning of October. The release of a new OPEC report in which the group revised down its demand forecasts for 2019, with higher-than-anticipated oil production from USA shale oil regions and the decision by the US government to grant exemptions from sanctions on Iranian oil included among the reasons for the crash.

A messy start to December: Snow, Rain, Ice this weekend
During any lulls at night there may still be a bit of mix at times before changing to all snow before daybreak Sunday . Wind gusts can work upwards of 35 miles per hour as temperatures climb into the upper 30 and in some spots lower 40s.

US crude stockpiles went through a 10th straight week of increase, up 3.6 million barrels in the week ending on November 23, piling concerns over supply surplus and sagging demand growth. This could also lead to increased foreign demand for dollar-denominated crude oil.

Most analysts expect a cut of around one million barrels per day, but some say this may not be enough to arrest the decline in prices. US crude oil exports averaged 2.4 million barrels per day, up by 473,000 barrels per day from the previous week.

Investors are focused on the G20 summit in Argentina, where leaders from the US, Russia and Saudi Arabia - the world's three biggest oil producers - have gathered in a prelude to a key OPEC meeting next week in Vienna. Last week, Alberta's government promised to buy about 80 locomotives and 7,000 rail cars to help move the crude out of the oil sands region and to market, but that won't drain the surplus supply very quickly and won't do much to get WCS prices back up. WTI decreased 0.52 USA dollar to settle at 50.93 dollars a barrel, while Brent decreased 0.8 dollar to close at 58.71 dollars a barrel. The global benchmark crude was at an $8.59 premium to WTI for the same month.

The market is closely watching the planned OPEC meeting which is scheduled to hold on Thursday.

The amount being cut is more than the total production of each of OPEC's three smallest members: Equatorial Guinea, Gabon and the Republic of Congo.