Crude oil settles 1 percent higher over optimisms of market rebalance

Crude oil settles 1 percent higher over optimisms of market rebalance

US West Texas Intermediate (WTI) crude hit USD57.81 earlier on Friday.

USA sanctions have hit Iranian and Venezuelan crude exports while unrest has curbed Libyan output.

The U.S. notched the new export record despite China halting imports of American crude in recent months amid a trade dispute with Washington.

"Oil prices, as well as the stock market have been rising on the anticipation that China and the USA would agree to a trade deal", said Andy Lipow, president of Lipow Oil Associates in Houston. Advancements in Washington-Beijing trade deal discussions also supported prices.

Oil prices have been driven up this year by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC). America is the only country to ever reach 12 million bpd of production.

At the same time, two key OPEC members exempt from the deal - Venezuela and Iran - have seen production fall as a result of US sanctions on both of those countries' oil industries.

Gains dropped because the United States reported its crude output hit a record 12 million barrels per day (bpd), and its exports increased.

Analysts said a global economic slowdown was preventing prices from surging beyond highs reached this week.

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OPEC and its de facto leader Saudi Arabia agreed late a year ago, along with producer allies such as Russian Federation, to cut output by 1.2 million barrels per day (bpd) to prevent a supply overhang from growing.

Both sides are pushing for an agreement by March 1, the end of a 90-day truce agreed by U.S. President Donald Trump and Chinese President Xi Jinping late previous year.

Much of that growing output is coming from USA shale fields, where drillers use advanced methods to squeeze crude oil and natural gas from rock formations.

At least in part offsetting that is surging USA crude oil production which reached 12 million bpd for the first time last week, the Energy Information Administration (EIA) said on Thursday.

USA commercial crude oil inventories rose by 3.7 million barrels to 454.5 million barrels in the week ended February 15, the EIA said.

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.

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.

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