By Ann Koh and Grant Smith
Futures rose 0.4% in New York. American crude inventories fell by 1.7 million barrels last week, according to a Bloomberg survey before Energy Information Administration data on Friday and industry figures due later Tuesday. Saudi Arabia and Kuwait agreed to resume oil production in their shared “neutral zone” more than four years after halting output, though with both nations adhering to the OPEC+ agreement the development isn’t expected to usher more crude into world markets.
Oil is on course for the best month since January after the U.S. and China made a breakthrough on an initial trade deal and the Organization of Petroleum Exporting Countries and its partners agreed to deepen output cuts. American crude inventories are coming off their highs even as the nation pumps near-record levels and shale explorers revive drilling.
“The latest OPEC+ agreement appears to have boosted sentiment,” analysts at consultant JBC Energy GmbH in Vienna said in a report.
West Texas Intermediate for February delivery rose 25 cents to $60.77 a barrel on the New York Mercantile Exchange as of 7:19 a.m. local time. The contract added 8 cents on Monday.
Brent for February settlement gained 42 cents to $66.81 a barrel on the ICE Futures Europe Exchange, after rising 25 cents on Monday. The global benchmark traded at a $6.04 premium to WTI.
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The agreement between Saudi Arabia and Kuwait allows “the resumption of oil production from the joint fields,” the Saudi energy ministry said on Twitter. The oil fields at the so-called neutral zone can produce as much as 500,000 barrels a day — more than each of OPEC’s three smallest members pumped last month. Chevron Corp. expects full production at the Wafra field to be restored within 12 months.
Higher production from non-OPEC nations and a mixed outlook for demand are likely to keep oil prices in check in 2020. WTI will average $58.50 a barrel next year, according to the median of analyst estimates compiled by Bloomberg since the OPEC+ meeting in early December.
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