Oil climbs as OPEC output drop eases concerns about glut

Oil Slips as America's Record Output Weighed Against OPEC+ Curbs

However, US crude oil production still rose by more than 2 million barrels per day (bpd) in 2018, to a record 11.9 million bpd.

In the US, crude production climbed by 200,000 barrels a day last week to 11.9 million, the highest level in weekly figures compiled by the Energy Information Administration since 1983.

Sub-US$100 oil prices have reduced returns from New Zealand's oil and gas sector, but crude and petroleum exports still brought in $1.06 billion in the year through November, 36 per cent more than a year earlier, according to Statistics NZ.

"The combination of production cuts by OPEC+ (especially the Saudis) and tightening sanctions on Iranian oil exports have brought the market close to balance", USA investment bank Jefferies said.

International Brent crude oil futures were at $62.57 per barrel at 0215 GMT, down 13 cents, or 0.2 percent, from their last close.

Meanwhile, US factory output expanded by the most in 10 months and the International Energy Agency forecast another year of growth in oil demand.

"It looks as if the market is coming into balance, and maybe into deficit later in the first part of the year", Neil Atkinson, head of the oil industry and markets division at the IEA, said in a Bloomberg television interview.

"The global outlook remains murky, despite emerging positives from a dovish Fed (now boosting US mortgage applications), faster China easing (China credit growth stabilizing) and a more durable US-China truce", US bank J.P. Morgan said in a note.

It recommended investors should "stay long" crude oil.

Crude oil output of the Organization of the Petroleum Exporting Countries (OPEC) dropped by 590 kb/d in December to reach 32.39 mb/d and non-OPEC supply fell by 360 kb/d in December to 61.2 mb/d, according to the IEA's Oil Market Report. Signs from the U.S. Federal Reserve that it won't rush to raise interest rates have also spurred investors to reverse bets that oil would fall while the dollar would rise.

Despite troubling economic data from China which weighed on oil prices in the beginning of the week, improving fundamentals are beginning to push crude prices upward. "By the middle of the year, United States crude output will probably be more than the capacity of either Saudi Arabia or Russian Federation". "Confidence is weakening in several major economies", said the report.

EIA forecasts global oil demand to grow by 1.5 million b/d in 2019 and in 2020, with China as the leading contributor in both years.

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