Oil nears 2019 highs spurred by OPEC production cuts

Oil prices hovered to near 2019 highs on Thursday, as OPEC supply cuts that took effect in January begin to stabilise the market amid a slowdown in global economic growth.

OPEC Source: Bloomberg

Oil prices floated near 2019 highs on Thursday, supported by OPEC supply cuts that took effect in January, with the West Texas Intermediate (WTI) futures hitting $57.17 a barrel during midday trading – closing in on a high of $57.55.

Elsewhere in the market, Brent crude futures slid by 4% to $67.04 a barrel after hitting their own 2019 high of $67.38 on Wednesday.

OPEC supply cuts help stabilise oil prices

Since taking effect in January, supply cuts agreed by OPEC have helped oil prices increase to above $60 dollars a barrel, after many market commentators feared the commodity would fall below the $40 back in November last year.

The Saudi Arabia-led organisation agreed near the end of last year, alongside non-OPEC producers like Russia to curtail oil production by 1.2 billion barrels a day in an effort to stop the commodities decline in price which had been in freefall throughout the latter half of 2018.

‘Willingness of the OPEC+ group to adhere with the output cut agreement will remain supportive of oil prices in the run-up to their scheduled April meeting,’ senior energy analyst at Interfax Energy Abhishek Kumar said.

‘Sharply declining oil output from Iran and Venezuela will further prompt bullish sentiment in the market,’ he added.

Another factor helping oil prices to surge of late is sanctions placed on Iranian and Venezuelan crude exports by US authorities, with the ongoing crisis in Libya hurting its supply.

Global economic slowdown hampering oils recovery

Some analysts were quick to point out that oil prices would likely have climbed above 2019 highs but concerns over a slowdown in global economic growth have left investors skittish.

‘Slowing economic growth will invariably lead to weakness in fuel consumption, thus eroding bullish gains for oil prices,’ Philip Futures analyst Benjamin Lu said.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG.

Spread bet and trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider.You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.