Oil was one of last year’s worst-performing commodities, but the related exchange traded products immediately shook that laggard status to start 2019.
As of February 1, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, were up an average of 18.50% to start 2019.
Last week, the Energy Information Administration issued a bullish weekly report on U.S. inventories after it revealed crude stockpiles rose by less than 1 million barrels last week, compared to expectations of a 3.1 million-barrel rise. Gasoline inventories also unexpectedly dipped by 2.2 million barrels in their the first decline since mid November as refining activity slowed by 2.8 percentage points to 90.1% capacity utilization rate.
“The market is being boosted by optimism over the higher-level trade talks between the United States and China that were completed on January 31. Also underpinning the market is strong adherence to the OPEC-led supply cuts during January,” reports OilPrice.com.
January 2019 represents one of oil’s best monthly performances on record. The month was Brent crude’s best month since April 2016. Energy information provider Argus Media, said producer cuts will eventually help level oil prices again as 2019 wears on.
In December, lengthy Organization of the Petroleum Exporting Countries (OPEC) discussions finally came to a conclusion, resulting in a larger-than-expected production cut. OPEC and associated partners agreed to cut 1.2 million barrels per day with OPEC being responsible for 800,000 barrels.