LONDON (Reuters) – Oil prices rose around 2 percent on Tuesday amid production cuts by OPEC and Russia as well as signs of lower U.S. oil stocks, but grim Chinese economic data raised fears for global growth.
Brent LCOc1 was up $1.13 or 1.92 percent at $60.12 per barrel by 1410 GMT.
U.S. crude CLc1 was up $1.07 or 2.12 percent at $51.58.
“OPEC-led cuts and declining U.S. rig counts have bolstered market sentiment in the new year,” Singapore-based brokerage Phillip Futures said.
The Middle East-led Organization of the Petroleum Exporting Countries and other producers including Russia agreed in late 2018 to cut supply starting this month, seeking to rein in a global glut.
The bloc and its allies set a meeting for March 17-18 to monitor implementation of their pact, sources told Reuters, and another on April 17-18 on whether to extend cuts beyond the agreed six months.
Further help has come from data showing the number of U.S. rigs looking for new oil dipped slightly to 873 in early 2019, and a Reuters poll on Monday found that U.S. crude oil stockpiles were likely to have fallen last week.
The rig data could signal a slowing of the swift rise in output from the United States, which became the world’s top oil producer in 2018. C-OUT-T-EIA.
But analysts said a price recovery may be short-lived, as a darkening economic outlook could dampen growth in fuel demand.
“Any price rally is unlikely to be sustainable in the first half of the year simply because the demand for OPEC’s oil is expected to be lower than the projected output from the organization,” PVM Oil Associates strategist Tamas Varga said.
Crude prices fell more than 2 percent on Monday after data showed weakening imports and exports in China, raising new worries about a global slowdown.
(GRAPHICS: U.S. oil production, drilling & storage levels – tmsnrt.rs/2GVNTmb)
But China’s National Development and Reform Commission offered some support on Tuesday, signaling it might roll out more fiscal stimulus.
Such positive signals and hopes for renewed U.S.-China talks to resolve trade tensions have boosted world stock markets and oil prices, but fears about global growth weigh heavily.
“It would seem that the market is having a rather hard time making up its mind as to which story to believe in,” consultancy JBC Energy said.
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