NEW YORK (Reuters) – Oil prices climbed about 3 percent on Monday, rebounding further from 1-1/2-year lows reached in December on support from OPEC production cuts and steadying equities markets.
FILE PHOTO: An oil well pump jack is seen at an oil field supply yard near Denver, Colorado, U.S., February 2, 2015. REUTERS/Rick Wilking/File Photo
Brent crude LCOc1 futures rose $1.47 to $58.53 a barrel, a 2.6 percent gain, as of 11:12 a.m. EST (1612 GMT). U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $1.56 to $49.52 a barrel, a 3.3 percent gain.
Oil futures have gained about 10 percent since last Monday.
“Momentum is coming back into the market from very depressed price levels,” Petromatrix strategist Olivier Jakob said.
Prices drew support from an agreed supply cut by the Organization of the Petroleum Exporting Countries, as well as some non-member countries such as Russia and Oman.
OPEC oil supply fell in December by 460,000 barrels per day (bpd) to 32.68 million bpd, a Reuters survey found last week, led by cuts from top exporter Saudi Arabia.
OPEC and its allies are trying to rein in a surge in global supply, driven mostly by the United States, where production surpassed 11 million bpd in 2018. Record high crude oil production C-OUT-T-EIA 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.
U.S. crude inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, fell by 565,000 barrels from last Tuesday to Friday, traders said, citing data from market intelligence firm Genscape.
More upbeat equity markets also offered support.
“When stock markets are strong oil usually follows suit,” PVM Oil Associates strategist Tamas Varga said.
Shares have risen on expectations that trade talks this week between the United States and China will ease a trade dispute. Disruptions to trade undermine prospects for economic growth and oil demand.
Goldman Sachs said in a note it had downgraded its average Brent crude oil forecast for 2019 to $62.50 a barrel from $70 due to “the strongest macro headwinds since 2015”.
Societe Generale cut its 2019 oil price forecast for Brent by $9 to $64 a barrel and reduced its forecast for U.S. light crude by $9 to $57 a barrel.
(GRAPHIC: U.S. oil production, drilling & storage levels – tmsnrt.rs/2GVNTmb)
(GRAPHIC: U.S. commercial crude oil inventories – tmsnrt.rs/2Axoc67)
Additional reporting by Amanda Cooper in London and Henning Gloystein in Singapore; Editing by Edmund Blair, Jason Neely and David Gregorio