Oil futures surge at the start of the London trading session on Tuesday, amid the steady flow of news: Oil output in the US is decreasing, OPEC talks on output freeze and pessimistic manufacturing data from China.

WTI futures for April rallied by 1.48% to $34.25 as of 07:25 GMT, Brent gained 1.09%, reaching $37.00 level. The upsurge is caused by reports from the US that Oil output declined in December for 3rd consecutive month by 43 000 barrels to its lowest pace of 9.26M barrels daily, according to the official data from the US Energy Department. In 2015, Oil output in the US had been rising to 9.43M per day, later taking downturn, as tumbling prices have made it highly unprofitable for the US firms to maintain high pumping levels.

The output in the OPEC cartel decline by 280,000, to 32.37M barrels daily, according to Reuters.

Discouraging manufacturing data from China pulls down the energy market, as it signals the Oil consumption will continue to fall. The February Manufacturing PMI (Purchasing Managers Index) released today, showed that industrial activity in China shrunk to 49.0 points, 0.3 points lower than 49.3 median estimate, down 0.4 points from January’s reading. Non-Manufacturing PMI declined from 53.5 to 52.7 points. However, analysts say that the freeze pact between OPEC, Russia and Iran won’t yield the desirable results, as glut on the Oil market will persist. Current global surplus averages 1M barrels daily.

The main obstacle for reaching an agreement on the output limits between Saudi Arabia and Russia is a clash of views on the Syrian conflict. In order to discuss the output limits, participation of Iran and Iraq is required, which can be difficult, with Iran’s aggressive export policy.

Asian indices rose, as risk concerns eased, Nikkei 225 added 0.37%, Topix index gained 0.23%, Hang Seng grew by 1.29%, CSI 300 added 1.85%. Yen fell against the Us Dollar by 0.22%.

European indices show moderate gains, thanks to an increase in Oil prices, FTSE 100 hovers near the yesterday’s closing price of 6,097.09, Euro Stoxx 50 gained 0.57%, CAC 40 added 0.90%, IBEX 35 index added 1.34%.

The US Dollar falls against the GBP and Australian Dollar, as Brexit risks wear off. The Australian currency rose because of the upturn the commodity market, GBP/USD gained 0.43%, AUD/USD added 0.62%.

USD/RUB drops below 74 level, first time since the start of January, as rallying Oil supports the Russian currency.

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