Improved US and China relations has weighed positively on oil prices. Chinese and U.S. officials concluded trade talks after a third day of negotiations Tuesday, feeding optimism that the two counties have made progress to resolve a dispute that has weighed on the economic outlook.
While any conclusions reached have yet to be announced, analysts said that market sentiment received a boost following US President Donald Trump’s comment on Tuesday that raised hopes of an improvement in trade relations.
“Talks with China are going very well!” Trump said in a tweet.
Crude futures also received support from signs of economic optimism seeping back into the market, says Harry Tchilinguirian of BNP Paribas.
“Equity markets have stabilized and rebounded allowing oil to refocus on its own supply fundamentals and the fact that we have already seeing declines in OPEC production in December and already declines in January of this year,” said Tchilinguirian.
OPEC’s December crude output fell 630,000 barrels per day to a six-month low of 32.43 million barrels per day, an S&P Global Platts survey of industry officials, analysts and shipping data showed Tuesday.
The cuts were led by Saudi Arabia, which trimmed its production 401,000 barrels per day to 10.6 million barrels per day last month. Riyadh has pledged to further cut January production to around 10.2 million barrels per day, well below the 10.31 million barrels per day level it pledged to maintain for the first half of 2019 as part of the 1.2 million barrels per day cuts OPEC and its allies agreed to in early December.