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Oil surges 5 percent on trade truce, expected supply cuts

Reuters  |  LONDON 

By Christopher Johnson

LONDON (Reuters) - prices jumped by more than 5 percent on Monday after the and agreed a 90-day truce in a trade dispute, Canada's province ordered a production cut, and as group OPEC looked set to reduce supply.

U.S. light rose $2.92 a barrel to a high of $53.85, up 5.7 percent, before easing to around $53.25 by 1420 GMT. Brent crude rose 5.3 percent or $3.14 to a high of $62.60 and was last trading around $62.00, up $2.54.

"From to Alberta, the market is about supply curtailments," said Norbert Rucker, at Swiss "A brightening market mood will likely extend today's price rally in the very near term."

and the agreed during a weekend meeting in of the Group of 20 leading economies not to impose additional trade tariffs for at least 90 days while they hold talks to resolve existing disputes.

The trade war between the world's two biggest economies has weighed heavily on global trade, sparking concerns of an economic slowdown.

has not been included in the list of products facing import tariffs, but traders said the positive sentiment of the truce was also driving crude markets.

Oil also received support from an announcement by that it would force producers to cut output by 8.7 percent, or 325,000 barrels per day (bpd), to deal with a pipeline bottleneck that has led to crude building up in storage.

The Organization of the Petroleum Exporting Countries meets on Dec. 6 to decide output policy. The group, along with non-OPEC member Russia, is expected to announce cuts aimed at reining in a production surplus that has pulled down crude prices by around a third since October.

"Markets are expecting to see a substantial production cut after Russian said his country's cooperation on with would continue," said Hussein Sayed, at brokerage

Within OPEC, said on Monday it would leave the club in January.

Qatar's is only around 600,000 bpd, but it is the world's biggest of liquefied (LNG).

The Gulf state has also been at loggerheads with its much bigger neighbour Saudi Arabia, the de facto OPEC

Outside OPEC, Russian stood at 11.37 million bpd in November, down from a post-Soviet record of 11.41 million bpd it reached in October, data showed on Sunday.

Meanwhile, in the continue to churn out record amounts of oil, with crude output at an unprecedented level of more than 11.5 million bpd.

With drilling activity still high, most analysts expect U.S. to rise further in 2019.

(Reporting by in London and Henning Gloystein in Singapore; Editing by and Mark Potter)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, December 03 2018. 20:14 IST