SINGAPORE: Oil prices were stable on Tuesday, supported by hopes that talks underway in Beijing involving the U.S. and Chinese officials could end trade disputes between the world’s biggest economies, while OPEC-led supply cuts also tightened markets.
International Brent crude futures were at $57.43 per barrel at 0218 GMT, up 10 cents, or 0.1 percent from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were at $48.62 per barrel, up 10 cents, or 0.2 percent.
U.S. Commerce Secretary Wilbur Ross said late on Monday that Beijing and Washington could reach a trade deal that “we can live with” as dozens of officials from China and the United States held talks in a bid to end a trade spat that has roiled global markets since last year.
Asian stock markets rose as investors hope Washington and Beijing will reach some sort of agreement.
Despite optimism around the talks in Beijing, some analysts warned that the relationship between Washington and Beijing remained on shaky grounds, and that tensions could flare up again soon.
There is also concern that a worldwide economic slowdown will dent fuel consumption, resulting in a reduction of bullish positions the hedge fund industry holds in crude futures.
OPEC VS SHALE
Looking at oil supplies, 2019 crude prices have been supported by supply cuts from a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russia.
Looming over the OPEC-led cuts, however, is a surge in U.S. oil supply, driven by a steep rise in onshore shale oil drilling and production.
As a result, U.S. crude oil production rose by a whopping 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.
With drilling activity still high, most analysts expect U.S. oil production to rise further this year.
Consultancy JBC Energy said it was likely that U.S. crude oil production was already “significantly above 12 million bpd” by early January.