U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Friday and are in a position to close higher for the week. Both futures contracts are also trading at their highest levels since December 19.
The markets are being boosted by optimism over the announcement of higher-level trade talks between the United States and China on January 7-8. Traders said the markets are also being underpinned by the start of the OPEC-led supply cuts on January 1.
A stronger-than-expected U.S. Non-Farm Payrolls report is also driving stocks higher, which is helping to generate further support for risky commodities like crude oil.
Higher Level Trade Talks
Prices firmed on Friday after China’s commerce ministry said that it would hold vice-ministerial level trade talks with U.S. counterparts in Beijing on January 7-8. Given the recent string of weak economic data from both countries, it seems there would be a sense of urgency to reach an agreement before there is a global recession.
OPEC Production Cuts
OPEC and its allies including Russia, agreed in December to reduce output by 1.2 million barrels per day (bpd) in 2019 versus October 2018 levels. This is supposed to trim the excessive global supply and stabilize prices. However, it’s going to take time. Traders feel that if OPEC can stay true to the deal, the global supply glut could be cleaned up within 3 to 4 months.
Reuters reported on Thursday…