Oil prices increased last Tuesday in light of positive economic records and as Sino-U.S. trade deal progress minimizes tension and anxiety across global market.
Brent crude LCOc1 was quoted up to 17 cents. This is equivalent to 0.3% at 62.30 per barrel at 0909 GMT. In line, U.S. crude CLc1 jumped up to 10 cents or 0.2% to $56.64 per barrel.
Oil price increase was boosted by positive progress on United States and China’s trade dispute as they are also the top consumers of oil that could boost demand.
China is persistent on urging U.S. President Donald Trump to take down imposed tariff as the initial phase of the US-China trade deal.
“If some of the existing tariffs were to be dismantled, that should restore some measure of global demand for oil as economic and trade conditions recover,” said Han Tan, market analyst at FXTM.
US-based oil inventories were predicted to have increased last week while stocks declined as disclosed by Reuters data last Monday.
The Federal Reserve’s interest rate scheme, the Dollar’s underperformance, and improved U.S. employment growth last October enforced the overall oil hike.
“We believe that the strength in oil prices will be short-lived, given the scale of the surplus that is expected over the 1H20,” ING analyst Warren Patterson said, pertaining to the initial half of 2020.
The risk to this view is if OPEC+ surprises the market in December by announcing even deeper than expected cuts for 2020,”he added.
The Organization of the Petroleum Exporting Countries, Soviet Union and other manufacturers, also known as OPEC+ have already implemented a scheme of cutting down oil production by 1.2 Million barrels a day.
Iranian Oil Minister Bijan Zanganeh is expecting larger oil output cuts agreement at the next group session in December.
OPEC stated that this is enough to sustain adequate amount of oil for the next five years despite focus on energy owed to economic expansion.
OPEC’s oil production and other liquids are forecasted to decline down to 32.8 Million barrels per day by 2024 as disclosed by the group in its 2019 World Oil Outlook.