By Adedapo Adesanya
Prices of crude oil look strong this week at the global market following fresh optimism last week on the trade deal between the United States and China.
During trading last week, this pushed prices higher as futures post a fourth consecutive week of gains, indicating an aggregate of three months of gains.
As for the Brent Crude, it rallied to its highest level since September to $68 per barrel, though it later fell to $66, while the West Texas Intermediate posted more than 2 percent gains in all four weeks reaching as high as $62 per barrel.
This new week looks better for oil especially with the new year coming. This is expected to be buoyed by the possible signing of an agreement between the US and China in the coming weeks.
President Donald Trump made new comments saying that both countries would “very shortly” sign the phase one trade pact. He told reporters, “We will ultimately, yes, when we get together. And we’ll be having a quicker signing because we want to get it done. The deal is done, it’s just being translated right now.” This was then backed up from China’s action as it agreed to cut tariffs from December 26 on food items and some other imports.
Consideration is also on United State’s crude oil inventories, which fell more than expected last week. According to data sourced from the American Petroleum Institute (API), stocks fell by 7.9 million barrels to 441.1 million barrels, below expectations of 1.83 million barrels.
On its end, the Energy Information Administration (EIA) reported that US crude inventories fell by 5.5 million, a contrast to the API data, as they foresaw up to 3 million barrels decrease.
As the new week begins, investors will also be looking at any remark made concerning the OPEC+ output cut deal of up to 1.7 million barrels as there are strong indications that countries like Russia may soon choose to opt out of the deal to help stop an oversupply that could lead to lower prices in 2020.
Business Post had reported recently that the Russian Energy Minister, Alexander Novak remarked on the possibility of this, saying, “This is not an indefinite process. A decision on the exit should be gradually taken in order to keep up market share and so that our companies would be able to provide and implement their future projects.”
The OPEC alliance had on December 6 decided to extend production cuts, and alongside the optimism surrounding the US-China trade agreement, these decisions will likely spur the direction of oil prices this week with chances of the WTI and Brent futures reaching $62 and $68 respectively.
For the Nigerian crude futures, the Bonny Light, banking on this, may trade close to $69 per barrel, while Brass River and Qua Iboe, which both traded at the $69 mark, may push to $70 per barrel.
Dipo Olowookere