Oil Price - Feb 12

[dan_s]

Oil prices rallied on Tuesday morning, after OPEC significantly reduced its crude output in January, making good on its latest deal to curb production and stave off a global glut in supplies.

In its closely watched monthly report, the Organization of the Petroleum Exporting Countries said its oil production had fallen by 797,000 barrels a day in January to 30.81 million barrels per day (bpd).U.S. West Texas Intermediate crude futures for March delivery on the New York Mercantile Exchange were up about $1.50/bbl at the time of this post.

The bulk of the cuts were shouldered by Saudi Arabia, the world's top oil exporter and de facto leader of OPEC. The kingdom pumped about 10.2 million bpd in January, down 350,000 bpd from December. Saudi Arabia need about $75/bbl Brent price to balance their national budget. That would push WTI to more than $65/bbl.

Riyadh will continue to cut production, reducing output to about 9.8 million bpd in March, Saudi Energy Minister Khalid al-Falih told the Financial Times in an article published on Tuesday before the U.S. markets opened.

In December, OPEC and a group of 10 producers outside the cartel, led by Russia, agreed to collectively cut production by a total of 1.2 million bpd through the first six months of 2019.

Oil's gains also came as appetite for riskier assets improved after lawmakers reached a tentative deal to avert another partial U.S. government shutdown and the U.S. and China expressed optimism about their ongoing trade talks.

In London Brent oil for April delivery on the ICE (NYSE:ICE) Futures Exchange in London rose $1.51, or about 2.4%, to $63.01 a barrel.