After a sharp downturn in December, oil prices have recovered, with the benchmark North American contract nearing the key $50 US a barrel threshold.
The West Texas Intermediate contract rose $1.68 on Monday morning to trade at $49.64 a barrel.
The stronger international prices helped buoy the Canadian contract, with Western Canada Select up $1.93 to $37.93.
A strong energy sector had the TSX/S&P index edging higher, up 13 points at midday to 14,439. It also helped the loonie, which was above 75 cents US again after plunging in December in tandem with oil.
Cuts in production promised by the Organization of Petroleum Exporting Countries are kicking in, and tanker volumes out of Saudi Arabia were cut by 500,000 barrels per day in December.
There is also lower output from the North Sea and from Alberta, which has implemented production caps because it doesn’t have sufficient pipeline capacity to get its crude to market.
OPEC and non-OPEC countries such as Russia, have agreed to cut production by 1.2-million barrels a day in January.
The exception is U.S. production, primarily shale oil, which rose 12 per cent in the past month, according to the latest figures from the U.S. Energy Information Administration.
In a report released Sunday, Goldman Sachs slashed its oil price forecast for 2019, citing rising shale production and slowing economic growth.
Oil’s slide in December was tied to fears about a decline in economic growth as the U.S. and China continue their trade war.
Goldman Sachs predicts WTI will average $55.50 a barrel in 2019, down from a prior estimate of $64.50, it said.
“We expect that the oil market will balance at a lower marginal cost in 2019 given: higher inventory levels to start the year, the persistent beat in 2018 shale production growth amidst little observed cost inflation, weaker than previously expected demand growth expectations (even at our above consensus forecasts) and increased low-cost production capacity,” its report said.
from Update Trend News http://bit.ly/2CWQRTB
0 Comments