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Crude Oil Gains as Russia Announces Production Cuts

December 11, 2018 at 22:22 by Vladimir Vyun

Crude oil rallied on Tuesday thanks to the news that Russia agreed to join production cuts after all. The positive general market sentiment, caused by the news of potential reduction of tariffs on US cars by China, also helped the commodity.

Previously, it was uncertain whether Russia will join the new output reduction deal. On Tuesday, at last, the matter became clear. Russian Energy Minister Alexander Novak announced that the country is going to slash oil production by 50,000 to 60,000 barrels per day in January.

Meanwhile, Libya declared force majeure on exports from its El Sharara field after militants seized the facility on weekend. This will result in a loss of 315,000 bpd of supply.

Futures for crude backed off from the daily highs by the end of the session, and market analysts had various theories for the reason. Some argued that it was because market participants were skeptical about compliance to the OPEC+ output cut deal. Other speculated that the market sentiment worsened after US President Donald Trump threatened to shut down the government if it does not fund the wall between the United States and Mexico, which Trump promised during his election campaign.

Contract for delivery of WTI crude oil gained 1.43% to $51.73 per barrel as of 22:06 GMT on NYMEX today. Brent crude for delivery in February advanced 0.62% to $60.34 on ICE.

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