Singapore — Crude oil futures ticked lower during mid-morning trade in Asia Monday, amid mild profit-taking within a tight range following the OPEC meeting.
Market participants' are currently looking out for development around the US-China trade deal to provide price direction.
At 11:15 am Singapore time (0315 GMT), ICE February Brent crude futures were down 23 cents/b (0.36%) from Friday's settle to $64.16/b, while the front-month NYMEX January light sweet crude contract moved 30 cents/b (0.51%) lower to $58.90/b.
Crude prices on Friday were supported after Saudi Arabia said that it will cut another 400,000 b/d of crude production on top of the OPEC+ agreement to cut output by 1.7 million b/d.
Earlier Friday, industry sources said Saudi Arabia agreed to hold its crude production at 10.151 million b/d as part of a proposal to add 496,000 b/d in output cuts to the OPEC+ coalition's existing 1.2 million b/d cut agreement.
However, that was followed by news that Saudi Arabia would cut another 400,000 b/d, bringing its production down to 9.744 million b/d.
This helped crude prices to trade higher, with the European benchmark contracts soaring by close to a $1/b during Friday's trading session.
"Crude oil rallied strongly after Saudi Arabia surprised the market with additional cuts under a new agreement," ANZ analysts said in a note Monday.
"Saudi Arabia is trying to reset market expectations. Still, a little bit of fact-checking suggests the informal commitment counts to Saudi production at 9.75 million barrels per day, which is not much below average January-October 2019 output of 9.81 million barrels per day," Stephen Innes, Asia Pacific Market Strategist at AxiTrader, said in a note Monday.
OPEC and its allies will meet again March 5-6 to review the cuts.
Focus this week will be mainly on trade talk developments between the US and China with the two economies expected to reach a phase one trade deal by December 15.
"A US-China trade phase one deal will be essential to keep the optimism going past this week with the December 15 deadline for further tariffs on $160 billion of Chinese imports to the US looming," Pan JIngyi, IG market strategist, said.
"On the US-China trade negotiations front, not much new has transpired, with the exception of perhaps White House economic adviser Larry Kudlow saying late last week that both sides are trying to agree on the amount of agricultural goods purchased by China," OCBC BANK analysts said in a note.
As of 0205 GMT, the US Dollar Index was up 0.01% at 97.69.
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