By Adedapo Adesanya
Last week, the Brent Crude traded up to $64 per barrel as oil prices saw gains circulate high as the US-China trade deal brought fresh optimism during the week, especially after China’s invitation to negotiators from its trade rival, the United States.
However, towards the end of the week, oil prices were dealt a huge blow as prices tumbled on profit-taking after hitting a two-month high as concerns about U.S.-China trade talks overshadowed expectations of an extension to OPEC+ production cuts.
On the trade talk front, Chinese President Xi Jinping on Friday said the country was willing to play its part in settling the phase one trade pact with the United States to avoid a trade war but noted that it was not afraid to retaliate when necessary.
Last week, oil prices were also swayed by the Organisation of the Petroleum Exporting Countries (OPEC), with Russia indicating that it was likely to extend existing production cuts by another three months to June 2020 when they meet in the Austrian capital, Vienna in December 5-6.
The group also said it was pushing for a stricter deal compliance from Nigeria and Iraq to comply with the output cut agreement.
The group has also said it will stress the need for stricter deal compliance from the likes of Iraq and Nigeria who are not fulfilling the end of the January deal which compels members to cut output close to 1.2 million per barrel.
Looking at the new week, markets will look towards fresh optimism that may arise from negotiations between China and the United States as last week’s mixed reactions saw prices perform better in the first three days then later got the shorter end towards the end.
Investors will be wary of this as oil prices may perform similarly in the first two days of the week, but may start to take a hit when the the American Petroleum Institute (API) weekly e inventories report on Tuesday could cause some unpredictable turn.
Judging from last week’s report by the Energy Information Administration (EIA) weekly inventories report on Wednesday, this week’s report will be most important and could help prices rise into the midweek.
Analysts will be looking at more positivity in the trade talks and also on whatever the OPEC alliance production cuts may bring but it is also likely that any negative output concerning the US-China trade relationship may drive prices downhill.
As at the time of the report, West Texas Intermediate (WTI) was trading at $58, Brent Crude was above the $62 mark.
Business Post analysts are looking at Brent Crude circulating higher this week and may hit $63 – $64 again while the WTI may trade at $60 per barrel.
Dipo Olowookere