Oil hits two-month high as China truce signals brighter outlook

A pump jack is seen at sunrise near Bakersfield

U.S. crude oil refinery inputs decreased during the week ending January 11, the U.S. Energy Information Administration (EIA) said on Wednesday.

The IEA, which coordinates the energy policies of industrial nations, said it was keeping its estimate of oil demand growth for this year unchanged at 1.4 million barrels per day, close to 2018 levels. Bloomberg News reported China proposed a six-year shopping binge for American goods, diminishing concerns about a brake on economic growth. The price has been on two-way action driven by news influenced momentum but support gained from OPEC crude oil production and supply cut implementation has helped prevent any sharp downside move.

Brent crude oil futures were down $1.06, or 1.7 percent, to $60.26 a barrel by 11:03 a.m. EST (1603 GMT).

THE price of crude oil has recorded further spike opening the week yesterday at $62.90 per barrel, a 20 cent mark-up on last weekend's closing price of $62.90.

Prices are likely to keep climbing at least until April, she said, when the United States is due to decide whether to extend waivers against sanctions for buyers of Iranian oil.

Meanwhile, oversupply worries have eased as the Organization of the Petroleum Exporting Countries (OPEC) and other major crude exporters including Russian Federation agreed past year to cut supply starting this month to curb a global glut.

As a result, OPEC and its Russia-led non-OPEC partners agreed to a new production cut deal in early December, targeting to remove 1.2 million bpd from the market between January and June this year, with Iran, Venezuela, and Libya exempted from cuts due to their 'special circumstances'.

Oil headed for a third weekly increase on expectations that production cuts by OPEC and resilient fuel demand will keep global markets in balance.

US gasoline production increased last week, averaging 9.6 million barrels per day.

More importantly, Brent's six-month calendar spread has strengthened from a contango (discount) of nearly $1.80 per barrel to just 35 cents over the same period.

China's crude oil imports in 2019 are likely to rise before the impact of the OPEC+ output cuts on the market. The number of rigs drilling for oil in the U.S.

The International Energy Agency maintained its outlook for an acceleration in global demand growth this year as lower prices offset the economic slowdown. In both 2019 and 2020, China is the leading contributor to global oil demand growth. Longs rose 1.8 percent, while shorts fell 10 percent.

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