Singapore — Crude oil futures jumped during mid-morning trade in Asia Friday as OPEC's kingpin Saudi Arabia pledge to lower its crude output to 10.311 million b/d, down 322,000 b/d from its October level.
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Meanwhile, market participants also attributed higher crude futures to bargain-hunting and firmer market sentiment ahead of the OPEC production cuts which will take effect January 2019.
At 11:20 am Singapore time (0320 GMT), ICE February Brent crude futures were up 73 cents/b (1.34%) from Thursday's settle at $55.08/b, while the NYMEX February light sweet crude contract gained 68 cents/b (1.48%) at $46.56/b.
According to a breakdown of member quotas under the producer group's supply accord obtained by S&P Global Platts, Saudi Arabia has pledged to lower its crude oil output to 10.311 million b/d -- a 322,000 b/d cut from its October level.
Iraq, OPEC's second highest producer, will cut 141,000 b/d to reach an output level of 4.512 million b/d and the UAE will cut 96,000 b/d to average 3.072 million b/d, according to the document prepared by OPEC's secretariat.
Russia, the largest non-OPEC participant, had previously said it was committed to reduce its production gradually by 230,000 b/d. The document says Russia's quota under the deal is 11.191 million b/d.
Meanwhile, market participants also attributed the partial rebounds in oil futures on bargain hunting.
"The oil market has been oversold, so I would say there's the element of bargain hunting," Phillip Futures' senior commodities manager Avtar Sandu said.
"Moreover, market sentiments are firmer as we approach January when the OPEC cuts would be implemented. However, from previous experiences, I feel it would take some time for the market to re-balance itself," Sandu added, pegging the Q1 pricing outlook as "sideways to slightly higher".
Market participants, however, are wary of geopolitical factors that could potentially drive markets and commodity prices lower.
"With most of the concerns centered domestically overnight in the US, however, we could be seeing a more measured pullback in comparison," IG market strategist Pan Jingyi said.
"That said, developments including updates on the US accusing Chinese officials of cyber attacks would still be worth watching as potentially aggravating factors amid the string of positive news surrounding US-China trade negotiations of late," Pan added.
According to the EIA Monday, US shale production is projected to rise by 134,000 b/d to 8.166 million b/d in January.
In other news, the US oil and gas rig count rose by three this week to 1,175 Thursday, reversing three weeks of declines from the recent peak a month ago, S&P Global Platts Analytics data showed Thursday.
As of 0320 GMT, the US Dollar Index was up 0.04% at 95.890.
--Ng Jing Zhi, firstname.lastname@example.org
--Edited by Norazlina Juma'at, email@example.com