Oil prices firm on trade hopes, but record United States output drags

Oil hovers near 2019 highs amid OPEC cuts, but economic slowdown weighs

Oil hovers near 2019 highs amid OPEC cuts, but economic slowdown weighs

OPEC and some non-affiliated producers such as Russian Federation agreed late a year ago to cut output by 1.2 million bpd to prevent a large supply overhang from growing.

"All in all the report is bearish, in particular the strong increases in crude oil stocks", said Cartsen Fritsch, analyst at Commerzbank in Frankfurt.

Contributing to the cautious optimism on Thursday was Nancy Tengler, chief investment strategist at Tengler Wealth Management, told CNBC television that while she anticipates a crude market slowdown, "if we see anything coming out of China positively in terms of global growth, we're going to start to see things re-accelerate".

As output surges, U.S. oil stocks are also rising.

Citing a goal to reduce the country's dependence on imported crude by 10 percent by 2022, Narendra Modi, prime minister for India, on Thursday endorsed revamped rules that will give producers pricing and marketing freedom that is now non-existent.

The number of rigs operating in USA oil fields fell four to 853 this week, and is up 54 from a year ago, according to the weekly data released Friday by the Baker Hughes, a Houston-based oilfield services company.

Friday's dips at least temporarily halted a rally that pushed crude prices this week to their highest for 2019 so far amid the supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).

Oil prices rose on Friday, supported by OPEC's ongoing supply cuts and hopes that Washington and Beijing may soon end their trade dispute. Yesterday, the market was rather dead, volume was low and US data on crude and products was mixed, so the market didn't really react, "Olivier Jakob of Petromatrix consultancy said".

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Goldman Sachs said in a note that it expects OPEC output to average 31.1 million bpd in 2019, down from 31.9 million bpd.

The main factor keeping oil prices from rising even further is soaring US output, which rose by more than 2 million bpd a year ago to a record 11.9 million bpd.

"We see total USA crude production hitting 13 million bpd by year-end, with 2019 averaging 12.5 million bpd", USA bank Citi said following the release of the EIA report.

At the same time, the USA dollar, which tends to have an inverse relationship with dollar-denominated commodities like oil, lost steam Friday and was 0.1% weaker compared with a basket of 16 of its peers, according to the WSJ Dollar Index. America is the only country to ever reach 12 million bpd of production.

However, U.S. energy firms cut four oil rigs operating this week after three weeks of adding rigs, General Electric Co's Baker Hughes energy services firm said in its report on Friday.

OPEC and some non-affiliated producers such as Russian Federation agreed late a year ago to cut output by 1.2 million bpd to prevent a large supply overhang from growing.

Surging U.S. crude oil production, is partly offsetting OPEC's cuts.

That means much will depend on demand, which Goldman said it expected to grow by 1.4 million bpd this year.

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