Oil prices neared their highest levels for three months today as the apparent stabilisation in the world economy continued.
The combination of Opec+ cuts, a trade deal between the US and China, and a slowdown in US shale production sent Brent crude over $65 a barrel, while West Texas Intermediate hit $60.22.
According to White House adviser Larry Kudlow, the “Phase One” agreement between the world’s largest economies is “absolutely completed.”
He added that under the deal US exports to China would double.
Craig Erlam, senior market analyst at Oanda Europe, said: “Christmas has definitely arrived early for oil producers.
“With Brent in the mid-60’s and WTI back above $60, producers will be much more at ease and the trend isn’t yet softening. Brent could get closer to $70 before the rally starts to run on fumes.”
Jasper Lawler, head of research at London Capital Group, agreed, saying: “We think once phase two negotiations get under way, Brent can push back toward $70 per barrel.”
Earlier in December production cartel Opec and its allies – collectively known as Opec+ – agreed to increase curbs on production by an additional 500,000 barrels a day.
The new restrictions come on top of current cuts of 1.2m barrels a day. Saudi Arabia has also committed to voluntary cuts of 400,000 extra barrels in order to stabilise the market.
JP Morgan and Goldman Sachs are among banks to have revised their 2020 price forecasts on the back of the cuts.
A predicted fall in US oil inventories would also aid the rally. Supply reports from the American Petroleum Institute are expected later this week.
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