Despite price gains, crude is still a shadow of its late-2018 might. File Image / Pixabay
The first few days of the new year are proving to be decent for crude prices - at least for the time being - as both West Texas Intermediate and Brent on Friday experienced another round of modest gains, with the former settling up 87 cents to $47.96 per barrel and the latter rising $1.11 to $57.06 per barrel.
WTI rose by nearly 6 percent for the week, while Brent increased about 9 percent.
However, as if to underscore just how dramatically both benchmarks have plummeted since late last year, U.S. president Donald Trump on Friday, after meeting with Congressional leaders to discuss the partial government shutdown, told the press that "Four months ago, oil hit $83 a barrel," and that oil "was heading to $100 and then it could have gone to $125."
Phil Flynn, senior market analyst, Price Futures Group Inc.
The big build in products has really caught everyone by surprise again
He added, "After I made some phone calls to OPEC [the Organization of the Petroleum Exporting Countries] and the OPEC nations - which is essentially a monopoly - all of a sudden, it started coming down.
"Didn't happen by luck, it happened through talent."
Doubtlessly to the ire of Trump opponents, crude prices may stay relatively low for the foreseeable future: also on Friday came Energy Information Administration data showing that gasoline inventories rose 6.9 million barrels last week, while distillate stockpiles grew by 9.5 million barrels, compared with forecasts for builds under 2 million barrels.
This prompted Phil Flynn, senior commodities analyst at Price Futures Group Inc., to remark that "The big build in products has really caught everyone by surprise again; the gasoline number was a little bit disappointing because demand was soft and we saw a big build in supply."
And despite news from China that Beijing will hold vice-ministerial trade talks with U.S. counterparts next week, thus signaling a prospective alleviating of the China-U.S. trade war, a new survey from the Institute for Supply Management showed U.S. factory activity slowing more than expected in December, with leading economies in Asia and Europe reporting manufacturing activity slowdowns.
Many analysts are therefore looking at OPEC in the hopes its newly-enacted 1.2 million barrels per day (bpd) cutback agreement will offset the advent of a crude glut and lead to a recovery of prices - and on that score they presumably took heart in comments made on Friday by Thamer Ghadhban, oil minister for Iraq, who said in the statement that he had directed oil officials to take urgent measures to comply with the cuts and that his country would keep its oil production at 4.513 million bpd for the first half of 2019.