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Oil prices steady on trade talk hopes and OPEC cuts, but slowdown looms

Reuters  |  SINGAPORE 

By Henning Gloystein

SINGAPORE (Reuters) - were stable on Tuesday, supported by hopes that talks in between U.S. and Chinese officials might defuse trade disputes between the world's biggest economies, while OPEC-led supply cuts also tightened markets.

International futures were at $57.42 per barrel at 0742 GMT, up 9 cents, or 0.2 percent from their last close.

U.S. Intermediate (WTI) were at $48.56 per barrel, up 4 cents, or 0.1 percent.

U.S. said on Monday that and could reach a trade deal that "we can live with" as dozens of officials from and the held talks in a bid to end a trade spat that has roiled global markets since last year.

Despite optimism around the talks in Beijing, some analysts warned that the relationship between and remained on shaky grounds, and that tensions could flare up again soon.

"We remain concerned about the world's most important bilateral relationship," political risk consultancy said in its 2019 outlook.

"The U.S. political establishment believes engagement with Beijing is no longer working, and it's embracing an openly confrontational approach...(and) rising nationalist sentiment makes it unlikely that Beijing will ignore U.S. provocations," said.

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

As a result, the hedge fund industry has cut back 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, respectively. "Our reflect slowing demand and rising supply globally," said Ratings


Looking at oil supplies, 2019 crude prices have been supported by supply cuts from a group of producers around the Middle East-dominated Organization of the Exporting Countries (OPEC) as well as non-member

"Crude have benefited from production cuts and steadying equities markets," said Mithun Fernando, at Australia's

Looming over the OPEC-led cuts, however, is a surge in U.S. oil supply, driven by a steep rise in and production.

As a result, U.S. rose by a whopping 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. was already "significantly above 12 million bpd" by early January.

(Reporting by Henning Gloystein; editing by Richard Pullin)

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

First Published: Tue, January 08 2019. 13:18 IST