Saudi-led OPEC and Russian Federation agreed on December 7 to curb their total crude oil production by 1.2 mbpd beginning on January 1 for six months, but the plan so far has had little impact on crude prices.
US West Texas Intermediate (WTI) crude oil futures were at $48.85 per barrel, up 33 cents, or 0.7 percent.
Brent crude, the global benchmark, was trading 2.5 per cent up at $58.60 a barrel last night as officials from the two countries began talks yesterday.
Beyond politics, oil markets are being supported by supply cuts started late past year by a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russian Federation. The aim of the OPEC cuts is to rein in a surge in global supply, driven mostly by the United States, where daily oil production grew by almost a fifth to over 11 million bpd in 2018. Meanwhile, expectations for a nationwide decline in U.S. crude inventories alleviated worries about a supply glut.More news: Russian tied to 2016 Trump Tower meeting indicted in separate US case
Rising production from North American shale basins, particularly the USA, which surged past 11 million bpd in August, outpaced sovereign producers Saudi Arabia and Russian Federation and was one of the factors behind the market's oversupply, the report said.
The US production of shale oil, which has added 5 mmbbl of oil to US output over the last decade to move America onto a similar level as Saudi Arabia and Russian Federation at around 11 mmbbl a day, has put a consistent downward pressure on oil prices in recent years.
Record high crude oil production C-OUT-T-EIA has pushed up USA inventories.
US crude inventories at Cushing, Oklahoma, the delivery point for USA crude futures, fell by 565,000 barrels from last Tuesday to Friday, traders said, citing data from market intelligence firm Genscape.More news: Kei Nishikori rolls into Brisbane final
The world's largest crude oil seller exported around 7.3 mbpd of crude in December and 7.9 mbpd in November, according to the report. "When stock markets are strong oil usually follows suit", PVM Oil Associates strategist Tamas Varga said.
"The oil market is still pricing in a sharp slowdown in global growth despite our economists' forecast for resilient growth and robust late-2018 oil demand data", the investment bank said. Shares have risen on expectations that trade talks this week between the United States and China will ease a trade dispute.
On the demand side, weaker economic growth prospects worldwide for 2019 cast a shadow for overall global oil demand.
Societe Generale cut its 2019 oil price forecast for Brent by $9 to $64 a barrel and reduced its forecast for United States light crude by $9 to $57 a barrel.More news: London's Heathrow airport cancels flights after drone sighting