Oil rises as investors latch on to OPEC cuts, supply outlook

Lease Operator Jon Pearson checks well pressure on a lease owned by Parsley Energy in the Permian Basin near Midland

Lease Operator Jon Pearson checks well pressure on a lease owned by Parsley Energy in the Permian Basin near Midland

U.S. crude oil field production increased during the week ending January 11, the U.S. Energy Information Administration (EIA) said on Wednesday.

Sub-US$100 oil prices have reduced returns from New Zealand's oil and gas sector, but crude and petroleum exports still brought in $1.06 billion in the year through November, 36 per cent more than a year earlier, according to Statistics NZ.

Thanks to the booming domestic production, the U.S.net imports of crude oil and petroleum products have been diminishing in recent years.

Brent crude oil futures surged past year - despite abundant global stockpiles - on speculation that Saudi Arabia wanted an oil price of US$80 a barrel for its since-deferred stock exchange listing of state oil giant Aramco.

In the United States, energy companies cut the number of rigs drilling for oil by 21 in the week to January 18, taking the count down to 852, the lowest since May 2018, energy services firm Baker Hughes said on Friday.

Opec secretary-general Mohammed Barkindo last week said the organisation remains "acutely conscious" of the importance of a sustainable, stable oil market for the global economy.

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The US could soon overtake Saudi Arabia in the production of crude oil which is now at peak capacity.

At 10:34 EST on Monday, WTI Crude was up 0.44 percent at $54.28, while Brent Crude was up 0.38 percent at $62.94.

Distillate stockpiles, which include diesel and heating oil, rose by 3.0 million barrels, versus expectations for a 1.6 million-barrel increase, the EIA data showed. However, news hit the market during North American market hours that USA officials are considering reversing tariff's imposed on Chinese import goods in a bid to ease the impact of trade war on United States economy and help close a trade deal with China. At the same time, the shale-oil boom is continuing unabated in the US, which by the middle of the year will be producing more crude than either Saudi Arabia or Russian Federation is able to.

In response to the drop in price in the second half of last year, the Organisation of the Petroleum Exporting Countries (OPEC) and non-members such as Russian Federation and Oman will cut production by a joint 1.2 million bpd this year.

Earlier in the week, Saudi Energy Minister Khalid Al-Falih said he's confident the cuts will have a "strong impact" on the market.

America's energy industry continued to expand under President Trump heading into the New Year, with new estimates showing United States crude output is on track to exceed Saudi Arabia "at their peak". This year, America's crude oil production is expected to average 12.1 million bpd in 2019, while crude production in 2020 is seen averaging 12.9 million bpd, with most of the growth coming from the Permian.

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