This article was originally published on ETFTrends.com.
Oil rose 18 percent this month, which marks its best January performance to date. The surge comes despite weak economic data flowing from China, the world's second largest consumer when it comes to oil.
U.S. West Texas Intermediate crude prices were at $53.79 a barrel, and posted an 18.5 percent monthly gain for January. This was WTI crude's biggest increase since April 2016 and also its best January since the futures began trading in 1983.
Brent crude is at $61.90 a barrel, which on pace to rise 15 percent in January--its best month since April 2016.
Energy information provider Argus Media, said producer cuts will eventually help level oil prices again as 2019 wears on.
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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.
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The latest production cut came as a surprise to many oil analysts as initial estimates were slated at 1 million barrels per day and 650,000 barrels per day for OPEC. Russia, though a non-OPEC member, has emerged as a major player in the negotiations, particularly when discussions got tense between rivals Saudi Arabia and Iran.
Oil producers will utilize output levels from October as the baseline level for cuts while the final deal will be reviewed in April. Final numbers are still under discussion, but according to a delegate familiar with the deal, Russia proposed a 2 percent reduction using that October output level as the baseline metric--the cut would then be equivalent to 228,000 barrels per day, which exceeds the initial cuts of 150,000 barrels per day.
Since 2016, OPEC's negotiation landscape has changed dramatically with Russia and Saudi Arabia putting aside their differences and now, together, exerting their influence over production discussions.
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