West Texas Intermediate front-month future prices rose 1.8 percent to $52.59 per barrel as of 7:00 a.m. EST while Brent crude oil futures gained 1.6 percent to $61.19 per barrel as of the same time.
"The more OPEC+ tries to support prices by withholding oil from the market, the more they give the USA shale sector an out from rationing supply growth themselves", it added.
In a monthly report, the Organization of the Petroleum Exporting Countries said 2019 demand for its crude would fall to 31.44 million barrels per day, 100,000 bpd less than predicted last month and 1.53 million less than it now produces.
The move to cut 1.2 million barrels per day from the market was not easy, Suhail Mohamed Al Mazrouei, UAE minister of energy and industry and president of the OPEC conference, has revealed in a television interview with Bloomberg. The shutdown will result in an output loss of 315,000 barrels a day, state producer National Oil Corp. said on its website.
OPEC has agreed to cut production by 800,000 barrels per day, led mainly by Saudi Arabia, while non-OPEC producers will reduce their supply by 400,000 bpd, and Russian Federation will bear the bulk of the cut from outside the organization.
Two U.S. major investment banks forecast low oil prices for next year and foresee rising U.S. oil output increasing overall supply in 2019 in spite of OPEC and its allies agreeing to curb production at the latest OPEC meeting in Vienna on December 7.
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Malaysia will extend its oil production cuts by another six months after the agreement between OPEC and other oil producers to reduce global supply ends this year.
Oil market watchers have been closely monitoring the situation to determine how the oil production cut will affect the oil prices, which is expected to soar for fiscal year 2019, according to some analysts.
Iran, Libya and Venezuela are excluded from the reduction of oil production arrangement. WTI and Brent settled at 50.93U.S. dollars and 58.71 dollars per barrel, respectively, at the end of the week.
Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang.
Oil gave up the day's gains heading into the settlement on Wednesday, after earlier drawing support from a report showing a drop in US crude inventories, a cut in Libyan exports and an OPEC-led deal to trim output. The slower economic growth is expected to influence the demand for oil next year and along with the growing production in the USA, the prices are estimated to decline eventually.
Opec said today it had offset a drop in sanctions-hit Iranian oil exports and lowered the 2019 forecast of demand for its crude, underlining the challenge the producer group faces to prevent a glut even after last week's decision to trim output.