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Oil prices edge up on trade talk hopes and OPEC cuts

Reuters  |  LONDON 

By Noah Browning

LONDON (Reuters) - rose slightly on Tuesday, supported by hopes that talks in between U.S. and Chinese officials might defuse a trade dispute between the world's two biggest economies, while OPEC-led supply cuts also tightened markets.

International futures gained 55 cents to $57.88 per barrel by 0945 GMT.

U.S. Intermediate (WTI) also climbed 55 cents, to $49.07 per barrel.

"I think there's a very good chance that we will get a reasonable settlement that can live with, that we can live with," U.S. said on Monday as officials from both countries held talks to end the spat.

Some analysts warned, however, that the relationship between and remained shaky and that tensions could soon flare anew.

"Surely, there will be more twists and turns in the saga and increasing U.S. tariffs on Chinese goods after March from 10 percent to 25 percent cannot be excluded," of said. "For now, however, optimism prevails."

There is also concern that a worldwide economic slowdown will dent fuel consumption.

As a result, the hedge fund industry has cut significantly its bullish positions in crude futures.

Ratings said it had lowered its for 2019 by $10 per barrel to $55 and $50 per barrel for Brent and WTI, respectively. "Our reflect slowing demand and rising supply globally," said Ratings


Crude prices so far in 2019 have been buoyed by supply cuts from the Organization of the Exporting Countries including top exporter Saudi Arabia, as well as non-member

Saudi-based Arab Investments Corp (APICORP), a firm specialising in funding projects, estimated in a report on Tuesday that are likely to trade at $60 to $70 per barrel by mid-2019.

But looming over the OPEC-led cuts is a surge in U.S. oil supply, driven by a steep rise in onshore shale drilling.

As a result, U.S. rose by 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.

With drilling activity still high, most analysts expect U.S. to rise further this year.

Consultancy JBC said it was likely that U.S. crude production was "significantly above 12 million bpd" by early January.

(Editing by Dale Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, January 08 2019. 15:45 IST