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Oil prices rally as US, China agree on no new tariffs, Qatar to quit OPEC

Xinhua | Updated: 2018-12-04 09:43
Vehicles queue up to be refueled at a gas station in Nanjing, East China's Jiangsu province, Oct 18, 2018. [Photo/IC]

NEW YORK - Oil prices rose on Monday, as the world's two largest economies agreed not to impose new additional tariffs and Doha decided to end its 57-year membership in OPEC.

The US and China agreed not to impose new additional tariffs, and instructed the economic teams of both sides to step up negotiations toward the removal of all additional tariffs and reach a concrete deal that's mutually beneficial and win-win.

Analysts say investors sentiment has been lifted because oil markets were also driven by optimism following the talks between the two leaders, which exceeded market expectations.

Qatar announced on Monday that it was set to withdraw from OPEC on Jan 1, 2019, wrapping up its 57-year membership of the oil cartel.

The announcement came three days ahead of a meeting of the Saudi-led OPEC and its allies to reshape global oil policy amid persistent concerns over a supply glut.

Qatar's Minister of State for Energy Affairs Saad al-Kaabi said Doha would attend OPEC's upcoming meeting on Thursday in Vienna, yet made an implicit criticism against Riyadh.

"We are not saying we are going to get out of the oil business but it is controlled by an organization managed by a country," Kaabi said in a press conference.

The decision "does come at a time when OPEC needs to hammer out a deal in the face of market skepticism in the cartel's ability to control production," said Ann-Louise Hittle, head of macro oils service at Wood Mackenzie, an Edinburgh-based global energy research and consultancy firm, in a press release.

Although Qatar is OPEC's smallest Middle East oil producer, it's currently the world's biggest liquefied natural gas (LNG) exporter.

"Within the complex geo-politics inside OPEC and the focus on oil, the Qatari position is not a surprise. Their stated position is to focus on expanding their LNG portfolio. This makes sense," Albert Helmig, CEO of Grey House, a private consulting firm focused on market structure, risk management and price models, told Xinhua.

Helmig note that despite investors' anticipation of an OPEC announcement of a production cut, adding that the market has been very cautious and "awaiting more details of size and timing of a production change."

The West Texas Intermediate for January delivery rose $2.02 to settle at $52.95 a barrel on the New York Mercantile Exchange, while Brent crude for January delivery increased $2.23 to close at $61.69 a barrel on the London ICE Futures Exchange.

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