Oil is on track to log in its biggest weekly gains in more than two years with U.S. crude climbing 9.5% this week and Brent advancing 7.8%. Hopes over the trade deal between the United States and China have lifted investor sentiments. Additionally, falling production and OPEC-led fresh crude output cuts have added to the strength.
This is especially true as oil output from the OPEC plunged 530,000 barrels per day to 32.6 million a day, last month. This marks the sharpest pullback since January 2017. Saudi Arabia, the world’s biggest crude exporter, curtailed output by 420,000 barrels a day to 10.65 million last month from a record of above 11 million in November.
Libya’s production fell 110,000 barrels a day to 1 million a day as Sharara, the country’s biggest oil field, has been offline since it was captured by an armed group and demonstrators demanding better government services in mid-December. Iran’s production also fell 120,000 barrels a day last month to 2.92 million a day.
Meanwhile, major oil producers have agreed to curb production by 1.2 million barrels per day during the first six months of 2019 in order to tackle global supply glut and rebalance the oil market. The 15-member OPEC cartel has agreed to reduce its output by 800,000 barrels per day, while Russia and the allied producers will take off 400,000 barrels per day from the market (read: Is Fresh OPEC+ Output Cut Enough to Boost Oil & Energy ETFs?).
This week’s gains followed the oil’s biggest weekly gain since December 2016. This made energy the best performing sector to start 2019.
Given the rebounding fundamentals, many energy ETFs and stocks have generated handsome returns so far this year. Below we have highlighted them:
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