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Oil Holds Above $60 as U.S. Crude Stockpiles Seen Shrinking


By Ann Koh and Grant Smith

(Bloomberg) Oil held above $60 a barrel before U.S. government data forecast to show that crude stockpiles declined again, mitigating concerns that global markets face a renewed surplus next year.Futures rose 0.4% in New York. American crude inventories fell by 1.7 million barrels last week, according to a Bloomberg survey before Energy Information Administration data on Friday and industry figures due later Tuesday. Saudi Arabia and Kuwait agreed to resume oil production in their shared “neutral zone” more than four years after halting output, though with both nations adhering to the OPEC+ agreement the development isn’t expected to usher more crude into world markets.

US crude stockpiles forecast to extend decline from 4-month high

Oil is on course for the best month since January after the U.S. and China made a breakthrough on an initial trade deal and the Organization of Petroleum Exporting Countries and its partners agreed to deepen output cuts. American crude inventories are coming off their highs even as the nation pumps near-record levels and shale explorers revive drilling.

“The latest OPEC+ agreement appears to have boosted sentiment,” analysts at consultant JBC Energy GmbH in Vienna said in a report.

West Texas Intermediate for February delivery rose 25 cents to $60.77 a barrel on the New York Mercantile Exchange as of 7:19 a.m. local time. The contract added 8 cents on Monday.

Brent for February settlement gained 42 cents to $66.81 a barrel on the ICE Futures Europe Exchange, after rising 25 cents on Monday. The global benchmark traded at a $6.04 premium to WTI.

See also: The Excitement in Oil Right Now Is Coming From South America

The agreement between Saudi Arabia and Kuwait allows “the resumption of oil production from the joint fields,” the Saudi energy ministry said on Twitter. The oil fields at the so-called neutral zone can produce as much as 500,000 barrels a day — more than each of OPEC’s three smallest members pumped last month. Chevron Corp. expects full production at the Wafra field to be restored within 12 months.

Higher production from non-OPEC nations and a mixed outlook for demand are likely to keep oil prices in check in 2020. WTI will average $58.50 a barrel next year, according to the median of analyst estimates compiled by Bloomberg since the OPEC+ meeting in early December.

Other market drivers
  • Iraq pared output by 110,000 barrels a day in December as it faced growing pressure to comply better with the terms of an OPEC agreement, according to Petro-Logistics SA.
  • Ahmed Gaid Salah, the powerful Algerian army chief who played a key role in the resignation of President Abdelaziz Bouteflika, died at 79, injecting fresh drama into the OPEC member’s simmering political crisis.
  • Exxon Mobil Corp. and its partners produced the first commercial crude from Guyana, setting the small South American nation on a path to potentially vast flows of oil revenues.


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