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Oil claws back up supported on declining supply
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Oil and gas tanks fill a port’s storage zone in Zhuhai, China. Beijing has been drumming the message that it has plenty of room to deploy measures to spur economic growth to counter the effects of a trade war with the United States. (Reuters/Aly Song)
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fter a tumultuous year- end, oil prices have been clawing their way up since the start of 2019 and the trend is expected to continue, supported by declining supply and a modest rebound in market sentiment.
Front-month ICE Brent crude futures hit both the highest and lowest levels for 2018 during the fourth quarter last year. The European crude benchmark had surged to a near 4-year high of US$86.74 per barrel on Oct. 3, before crashing more than 40 percent to briefly trade below the $50 mark on Dec. 26.
The Middle Eastern crude benchmark Dubai, a key price tracked by Asian importers, also posted a sharp decline during Q4 last year. The S&P Global Platts second-month Dubai swap tumbled 41 percent from the 2018 peak of $82.85 per barrel assessed on Oct. 4 to $49.04 on Dec. 26.
But prices have since rebounded, largely driven by production cuts by the world’s largest oil exporter Saudi Arabia. Platts’ latest survey showed the Organization of the Petroleum Exporting Countries (OPEC) crude production in December at 32.43 million barrels of oil per day (bopd), a six-month low and down 630,000 bopd from November.
