Following the cutback that the Organization of the Petroleum Exporting Countries, OPEC in short, made on the amount of crude supply back in December, the price of oil went as high as $57 a barrel in the U.S. The decision made by the organization also resulted in a drop in the U.S crude inventories as pointed out by the American Petroleum Institute. OPEC, Russia and other non-members came to the decision that they will cut the supply by 1.2 million barrels per day in 2019.
The drop in the crude supply may have resulted in the hike of petrol price in the U.S. Shortly before, China said that they were looking for ways to resolve the currently going on trade dispute with the United States and as such China was hoping to plan talks with the United States. Both of these countries have been at trade war with each other for much of the last year which economically affected both of these countries resulting in roiling financial markets. Manufacturing activities in Europe too have been affected by this conflict going on between two countries. China’s commerce ministry informed that the above-mentioned talk may take place in Beijing on January 7-8.
Jitters over the health of the global economy look set to endure but are being lost on the oil market, at least for the time being. That said, whether this bout of price strength can be sustained is far from certain. – Stephen Brennock, oil broker PVM
ICE Brent crude faced an overall 84 cents increase making it priced at $56.79 a barrel by 0932 GMT and U.S crude oil rose up to 81 cents bringing the price up at $47.90. The American Petroleum Institute further mentioned yesterday that the U.S crude stocks fell by 4.5 million barrels last week. If the trade dispute between China and the U.S is not resolved anytime soon, it may lead to a global economic slowdown. However, both the Bren crude and the U.S crude oil are still on track for solid gains as of the first week of the year.