WTI extends the rally near $50.00 on trade hopes, looks to API

WTI extends the rally near $50.00 on trade hopes, looks to API

The West Texas Intermediate for February delivery increased 0.56 USA dollar to settle at 48.52 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery rose 0.27 dollar to close at 57.33 dollars a barrel on the London ICE Futures Exchange. That wrong-footed OPEC with Saudi Arabia and Russian Federation both pumping more than 11 million b/d at that time in a bid to offset the risk of lost Iranian barrels and left the market awash with crude.

"The U.S. political establishment believes engagement with Beijing is no longer working, and it's embracing an openly confrontational approach..." US West Texas Intermediate (WTI) crude futures rose 56 cents to settle at $48.52 a barrel, a 1.17 percent gain.

Oil has gained almost 12 per cent since last Monday, its biggest week-on-week rally since early December 2016.

"Momentum is coming back into the market from very depressed price levels", Petromatrix strategist Olivier Jakob said. Record high crude oil production has pushed up U.S. inventories.

"The oil market continues to rally as the OPEC and non-OPEC production cuts are taking effect, reducing the oversupply situation that we've been seeing in the market", said Andrew Lipow, president of Lipow Oil Associates in Houston. To date, a 10 percent tariff is in still place on $200 billion worth of Chinese goods entering the US, while that figure could increase to 25 percent with another $267 billion worth of additional Chinese goods levied if the two sides can't read a trade deal by their self-imposed March 2 deadline.

Futures are rebounding as the Organisation of the Petroleum Exporting Countries (Opec) and its allies start their pledged production cuts this month, led by Saudi Arabia, and after the US Federal Reserve signalled a hold in interest rate hikes that had spurred risk aversion and volatility across global financial markets.

As a result, USA crude oil production C-OUT-T-EIA rose by a whopping 2 million barrels per day (bpd) a year ago to a world record 11.7 million bpd.

"If compliance by OPEC and the allied non-OPEC countries is similarly high as in the agreement two years ago, the oil market is likely to be rebalanced during the first half year", Commerzbank wrote in a note on Monday. Shares have risen on expectations that trade talks this week between the United States and China will ease a trade dispute.

"The oil market is still pricing in a sharp slowdown in global growth despite our economists' forecast for resilient growth and robust late-2018 oil demand data", the investment bank said.

Brent crude has risen by around $4 since the cuts came into force on 1 January.