Singapore: Oil headed for its biggest monthly gain since April 2015 as data showed the Opec+ coalition’s output cuts starting to kick in, while a more dovish Federal Reserve boosted markets and improved the growth outlook.
Futures in New York rose for a third day, taking their advance in January to more than 20 per cent. The Fed signalled it’s done raising rates for the time being, pushing down the dollar.
The crude benchmark in New York has rebounded this year after plunging almost 40 per cent in the last quarter of 2018. Those declines prompted Opec and its allies to embark on a mission to curb output. The crisis in Venezuela is threatening to limit supplies further if it worsens, while the question of whether the US and China can resolve their trade differences remains pivotal for the demand outlook.
West Texas Intermediate crude for March delivery rose 43 cents to $54.66 a barrel on the New York Mercantile Exchange at 12:27pm in Singapore. It gained 92 cents on Wednesday to close at $54.23 and is up $9.25 so far in January.
Brent for March settlement was 61 cents higher at $62.26 a barrel on the London-based ICE Futures Europe exchange. Futures have increased 16 per cent in January, on course for the biggest gain since April 2016. The more-active April contract advanced 62 cents to $62.16. The global benchmark crude was at a $7.61 premium to WTI.
The Fed’s more accommodative stance “is seen as pointing to much better global growth prospects over the medium to longer term,” said Michael McCarthy, chief market strategist at CMC Markets. “The Russia and Opec moves are clearly supportive of prices in the short term.”
US Energy Information Administration data released Wednesday showed Saudi Arabia shipped the least amount of oil to the US on a weekly basis in about 15 months, the latest evidence the Opec+ coalition cuts are impacting the market. Under a plan agreed in December, Opec+ producers will reduce their output by a combined 1.2 million barrels a day from October levels.
Russia’s average daily oil output this month was 50,000 barrels a day lower than October. The country has pledged to gradually implement a reduction of 228,000 barrels a day this quarter and maintain the cap until the end of June.