Oil hits 2019 highs on U.S.-China trade hopes, but U.S. output weighs
* China struggle to bridge trade gaps, more time seen likely
* U.S. oil output hits 12 mln bpd: https://tmsnrt.rs/2VegNR3
* Output in U.S. to reach 13 mln bpd by end-2019 -Citi
* U.S. oil drillers cut rigs for first week in three -Baker
(Adds settlement prices, market activity)
By Laila Kearney
NEW YORK, Feb 22 (Reuters) - Oil prices touched their
highest since mid-November on Friday and posted weekly gains for
the second week in a row, boosted by hopes that U.S.-China trade
talks would soon produce a deal, although new record U.S. oil
supply limited gains.
Brent crude futures briefly reached $67.73 a barrel,
their 2019 high. The global benchmark fell 5 cents to settle at
$67.12 a barrel. Brent gained 1.2 percent on the week.
U.S. West Texas Intermediate (WTI) crude futures
gained 30 cents to settle at $57.26 per barrel, after hitting
$57.81 earlier on Friday, also their highest for the year. WTI
recorded a 3-percent weekly rise and reached its strongest
settlement price of 2019.
Top U.S. and Chinese trade negotiators met on Friday to wrap
up a week of talks that have seen the two sides struggle to
reach a deal by a March 1 deadline.
U.S. President Donald Trump will meet with Chinese Vice
Premier Liu He at the Oval Office later on Friday.
"Oil prices, as well as the stock market have been rising on
the anticipation that China and the U.S. would agree to a trade
deal," said Andy Lipow, president of Lipow Oil Associates in
Houston. "In addition, we're seeing a tightening of oil supplies
around the world resulting from OPEC and non-OPEC production
Both oil benchmarks have risen this year after the
Organization of the Petroleum Exporting Countries and its
allies, including Russia, began to cut output to prevent a
supply glut from growing.
Surging U.S. crude oil production <C-OUT-T-EIA>, is partly
offsetting OPEC's cuts.
U.S. crude production last week climbed to a record 12
million barrels per day as stockpiles built for a fifth straight
week to their highest since October 2017 and exports hit an
all-time high, the Energy Information Administration said on
"We see total U.S. crude production hitting 13 million bpd
by year-end, with 2019 averaging 12.5 million bpd," U.S. bank
Citi said following the release of the EIA report.
However, U.S. energy firms cut four oil rigs operating this
week after three weeks of adding rigs, General Electric Co's
Baker Hughes energy services firm said in its report on
Meanwhile, crude inventories in West Texas fell to the
lowest in four months after an additional pipeline started
transporting crude from the largest U.S. shale field to the Gulf
Coast, largely for exports, data from market intelligence
provider Genscape showed.
With U.S. supply surging, Goldman Sachs said it expected
non-OPEC supply to grow by 1.9 million bpd this year, more than
offsetting the OPEC cuts.
That means much will depend on demand, which Goldman said it
expected to grow by 1.4 million bpd in 2019. Goldman said it
expected an average Brent price of $60-$65 per barrel in 2019
Money managers cut their net long U.S. crude futures and
options positions in the week to Feb. 5, the U.S. Commodity
Futures Trading Commission (CFTC) said on Friday.
(Additional reporting by Julia Payne and Ahmad Ghaddar in
London and Henning Gloystein in Singapore; Editing by Marguerita
Choy and James Dalgleish)
First Published: 2019-02-22 02:21:42
Updated 2019-02-22 22:49:36
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