Oil prices rise in thin pre-holiday trade and as US stocks decline

London/Tokyo — Oil prices rose on Tuesday in thin, pre-Christmas trading after Russia’s energy minister said co-operation with oil cartel Opec to support the market would continue and as analysts forecast a second weekly decline in US crude inventories.

Brent crude was up 17c, or 0.25%, at $66.56 a barrel by 11.10am GMT. US West Texas Intermediate (WTI) was 9c higher at $60.61 a barrel.

Opec and Russia will continue their co-operation as long as it is “effective and brings results”, Russian energy minister Alexander Novak said in an interview on Monday.

Opec and allies (Opec+) agreed in November to extend and deepen output curbs in place since 2017. The reduction of output could see as much as 2.1-million barrels per day (bpd) taken off the market, or about 2% of global demand.

Still, Opec needs to do more to balance out the market on a sustainable basis, Bjørnar Tonhaugen, head of oil market research at Rystad Energy, said in a note. “The Opec cuts didn’t fully solve the problem – instead they offer a light bandage to get through the first quarter of 2020.” 

Possibly adding to extra supply was a deal signed on Tuesday between Kuwait and Saudi Arabia on the neutral zone between the two countries. The deal aims to end a five-year year dispute between the Opec members and re-open fields laterin 2020 that can produce 0.5-million bpd, or 0.5% of global supply.

While Opec has been cutting production, US producers have been filling the gap, pumping ever greater amounts of crude to reach a record high of about 13-million bpd in November. That has helped swell inventories with US stocks up about 1% for the year.

Crude stocks are, however, expected to have fallen by about 1.8-million barrels last week, a second week of declines, according to a preliminary Reuters poll.

The weekly government report on inventories has been delayed by two days due to Christmas. The report is normally released on Wednesday at 3.30pm GMT.

Reuters