Oil rose on Friday to its highest in nearly three months as progress in resolving the US-China trade dispute was announced, and a decisive Tory win in Britain’s general election appeared to settle two uncertainties that have plagued the markets for months. At the close, NY oil was just over $60 and London was $65.22. There are two major unknowns that will determine where the oil prices go next year. The first is how well OPEC and its associates adhere to the agreement to make additional production cuts, and the second is how much US shale oil production will increase in 2020.
Oil prices rose on Friday, closing at $59.08 in N.Y. and $64.31 in London, up about 7 percent for the week. The surge came as a meeting of OPEC and its allies agreed to deepen output cuts by 500,000 b/d in early 2020. The additional reductions will last throughout the first quarter, and the group will meet again in early March for an extraordinary meeting to determine if the cut will be extended. OPEC will shoulder around two-thirds of the additional cuts.
US crude futures fell 5.1 percent to $55.17 a barrel in New York last Friday, paring most of their November rebound and logging their biggest drop since mid-September. Prices are 17 percent below their April peaks. Brent dropped 2.3 percent to $63.43 a barrel on Friday after edging lower on Thursday when US markets were closed for Thanksgiving.