Oil prices rose slightly today as worries over signs of slower economic growth in China were countered by the Organization of Petroleum Exporting Countries’ (OPEC) production cutbacks. Brent crude traded at $55.69 per barrel, while West Texas Intermediate (WTI) rose to near $47 per barrel.
Prices bounced back as a result of investors’ confidence that OPEC will push on with promised production cuts, with data showing the group had made an early start on its pledged curbs. “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. “Now we’re starting to see that.”
In an attempt to push against the tide of lower oil prices, OPEC kingpin, Saudi Arabia reduced production a month before wider supply curbs pledged by OPEC and its allies started this month. The kingdom’s cutbacks reduced OPEC’s overall output by 530,000 barrels a day in December, the group’s sharpest pullback since January 2017.
“OPEC and other producers not only have to deal with a renewed pick-up in U.S. production, but also the global outlook for growth and demand,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “The market worries when data from the world’s biggest importer, China, continues to show signs of slowing.”
Also, crude initially fell as much as 2.6 percent as Apple Inc. cited an unforeseen slowdown in China and cut its sales outlook, just days after data showed weakening factory conditions across Asia.
Apple’s forecast cut is the latest sign that a long-running trade war between the U.S. and China may be hurting the world’s two biggest economies. Along with political turmoil in Washington and higher interest rates by global central banks, the spat has weighed on crude.
On another hand, Venezuela, once Latin America’s largest oil exporter, ended 2018 with a whimper as crude sales dropped to the lowest in nearly three decades.