Oil Heads for Biggest Weekly Gain Since 2017

Oil Heads for Biggest Weekly Gain Since 2017

The Saudis have used the price-boosting strategy in the past to shrink US stockpiles, the most transparent and closely-watched inventories in the world.

International Brent crude futures LCOc1 were down $0.07 at $54.84 a barrel.

This came after earlier falling more than $1 a barrel as the world's top producers pump at record highs and signs of economic slowdown unnerve the market.

Crude exports from Saudi Arabia fell by a half-million barrels a day in December, led by lower flows to the US and China, according to tanker tracking data compiled by Bloomberg, and the United Arab Emirates showed a decline as well.

West Texas Intermediate for February delivery rose $1.04, or 2.2 percent, to $48.13 a barrel on the New York Mercantile Exchange.

Surging shale output has helped make the United States the world's biggest oil producer, ahead of Saudi Arabia and Russian Federation.

USA crude production stood at a record 11.7 million barrels per day (bpd) in late 2018, making America the world's biggest oil producer. Additionally, figures from ClipperData have shown that loadings of Saudi crude on ships bound for the United States have been falling in recent months. "And you've got OPEC cutting".

Crude oil cargoes leaving for the United States from Nigeria and other members of the Organisation of Petroleum Exporting Countries dropped in December to the lowest level in at least five years, data from Refinitiv Eikon and market intelligence firm, Kpler, showed.

Weekly U.S. government data on oil inventories will be released on Friday, two days later than normal because of the New Year holiday.

"The omens are far from encouraging", said Stephen Brennock of oil broker PVM, citing rising non-OPEC supply and the likelihood of further increases in oil inventories.

Japan's MUFG bank said in its 2019 oil market outlook that "on the demand side, oil has not been immune from the broad cross-asset sell-off as global growth concerns...mount downside pressure on oil demand".

"The current bearish bias will therefore continue in the near term and it stands to reason that oil will struggle to break out from its current trough", he said. "Now we're starting to see that".

"We really do need a sustained effort from some of the OPEC producers to take supply out of the market in order for prices to recover", Jason Gammel, an analyst at Jefferies LLC, said in a Bloomberg television interview.

Oil has slid to $56 a barrel from a four-year high of $86 in October on signs of excess supply.

In December, UAE Energy Minister Suhail al-Mazrouei, who also now serves as the president of OPEC, said both OPEC and non-OPEC members are ready to extend output cuts for another six months if the recent measures to boost the price of oil fail to boost the crude price.

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