Crude oil prices rose Monday as U.S.-China trade talks got underway, while Saudi Arabia reportedly plans deeper cuts to its oil exports.
XThe world's top oil exporter plans to cut crude exports to 7.1 million barrels a day by the end of this month, OPEC sources told the Wall Street Journal.
That would be down from earlier cuts to 7.253 million barrels per day in December and 7.717 million in November.
And the kingdom may cut further. Exports could come down by as much as 800,000 barrels a day from November levels, according to the Journal, suggesting Saudi Arabia will trim oil production by more than what it had agreed to last month.
The reason for the more aggressive stance is that Saudi Arabia plans to ramp up government spending sharply and needs oil prices of about $80 per barrel, the Journal said.
Brent crude oil prices were up 2% at $58.19 per barrel, nearing the $60 level. U.S. crude oil prices jumped 2.7% to $49.25, taking a step closer toward the $50 level.
Exxon Mobil (XOM) shares rose 0.9% on the stock market today. Chevron (CVX) rallied 1.3%, Royal Dutch Shell (RDSA) edged up 0.1% and BP (BP) added 0.3%.
2019 Outlook For Crude Oil Prices
Earlier Monday, signs of easing tensions between the U.S. and China on their trade war bolstered crude oil prices.
Vice Premier Liu He, China's most senior economic officer, attended the first day of face-to-face talks in Beijing with U.S. Deputy Trade Representative Jeffrey Gerrish, a sign that China is serious about ending the trade war with the U.S.
The U.S.-China trade war, involving the two largest economies, has dampened expectations for global economic growth and hit U.S. oil exports.
"Prior to the tit-for-tat tariffs being imposed from the middle of last year, crude oil was a success story in the U.S.-China trade relationship as Beijing bought increasing volumes of booming U.S. shale oil production," Phil Flynn, senior market analyst at Price Futures Group, wrote in his daily Energy Report.
While the China trade talks and early signs that OPEC is following through with its production cuts are supporting oil prices, some bearish signs remain.
Despite easing economic tensions with China, Goldman Sachs lowered its forecast for Brent crude oil prices to $62.50 per barrel this year. That's down from a prior estimate of $70. The investment bank sees West Texas Intermediate averaging $55.50 per barrel, cutting its earlier estimates of $64.50.
Meanwhile, domestic crude stockpiles were "virtually unchanged" last week, according to the Energy Information Administration. Analysts polled by S&P Global Platts had expected a 1.3 million-barrel drop in crude supplies.
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Crude Oil Prices Rise As OPEC Production Dives Before Official Cuts Kick In
The post Crude Oil Prices Rally As Saudi Arabia Eyes More Drastic Measures appeared first on Investor's Business Daily.
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