Published: Mon, January 14, 2019
Money | By Ralph Mccoy

Oil down but set for weekly gain amid caution over global economy

Oil down but set for weekly gain amid caution over global economy

The Stock Exchange of Thailand was down slightly in Thursday afternoon trading as Asian markets delivered mixed results Thursday following the end of three days of trade talks between the US and Chinese without significant breakthroughs.

Oil headed for its biggest weekly gain in over two years on hopes that OPEC will manage to shrink a glut and trade tensions between the USA and China will ease.

"Saudi is turning the screws on export supply in order to re-balance the market in their favor". The global benchmark crude has also jumped more than 20% since December 24, meeting the definition of a bull market.

The Organization of Petroleum Exporting Countries and its partners vowed last month to curb output by 1.2 MMbopd, countering a boom in US production. In December, U.S. President Donald Trump and Chinese leader Xi Jinping agreed to a 90-day tariffs cease-fire, for negotiators to soothe tensions that have unsettled trade. A deal between the nations could boost flagging global growth that underpins oil demand.

More fundamentally, however, oil prices have been receiving support from supply cuts started at the end of 2018 by a group of producers around the Organisation of the Petroleum Exporting Countries as well as a non-OPEC member, Russia.

At trading start on Thursday, oil prices were down around 1 percent as USA crude production endured at a record high level to keep a downward pressure on prices.

Oil prices continued to rise during the week ending January 11, with the price of West Texas Intermediate (WTI) for February delivery increasing by 7.6 percent and Brent crude for March delivery increasing by 6.0 percent.

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Gold prices rose on Wednesday, with spot gold XAU= rising 0.49 percent to $1,291.2 per ounce. It added 23 cents to $52.94 per barrel on Thursday.

Earlier in the session, both benchmarks hit their highest in almost a month. The global benchmark crude traded at a premium of $8.73 a barrel to WTI for the same month.

While the US Energy Information Administration reported that crude inventories shrank by 1.68-million barrels last week, the steepest drop since November, there were substantial increases in supplies of refined products such as gasoline.

"Responsible countries like the kingdom and other like-minded countries will continue to steward the market", Al-Falih said. But it gave few details on key issues at stake, including a scheduled US tariff increase on $200 billion worth of Chinese imports. China's ministry of commerce said that the negotiations were "extensive, deep and meticulous" without offering specifics.

Consultancy JBC Energy this week said it was probable that US crude production was "significantly above 12 million bpd" this month.

Meanwhile, dovish commentary by Federal Reserve Chairman Jerome Powell and his deputy Richard Clarida has added to positive investor sentiment. Off-topic, inappropriate or insulting comments will be removed.

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