By Adedapo Adesanya
Last week was beneficial for oil as prices gained more than 90 percent of the week as Brent crude, the global benchmark, got close to $62 per barrel and set a weekly gain of 4 percent.
Also, sharing the good news was the US Crude, West Texas Intermediate (WTI), which traded above $56 per barrel as it recorded what would be its strongest gains since June, quoting a weekly rise of more than 5 percent.
Over the week, the WTI circulated mostly around $56 per while the Brent Crude crossed the $60 and aimed for $62 but saw a shortfall to peak at $61.73.
Much of this could be attributed to the affirmative action of the Organization of the Petroleum Exporting Countries (OPEC) and their allies and its consideration to further reduce crude output when the oil cartel meet in December due to growing concerns about a slowdown in growth for oil demand.
This was evident in the cartel’s lead country, Saudi Arabia, making its largest cutbacks. It also pushed for producers to follow the arrangement as two of the member nation, Nigeria and Iraq, are still not in compliance with the oil cut as the group hopes to sustain oil market stability beyond 2020.
OPEC and its allies will meet on December 5 and 6 in Vienna, Austria to review output policy.
On the political front, the trade war between the US and China continued to impact on oil demand growth but prices had been slightly trading higher earlier after there was evident progress in trade talks between both countries.
Oil prices also maintained their strong performance last week following the release of the US Energy Information Administration (EIA) report on Thursday that showed American crude inventories fell by 1.7 million barrels and showed an unexpected weekly decline in U.S. crude supplies which was first time in over a month.
This week is expected to hold a better outlook for oil largely based on the fact that both China and the United States continue to make good progress on the first part of the trade deal to be signed next month, with a part set to be finalised.
It was reported that the two largest economies have pushed for a trade agreement as they try to end a tariff war that is negatively affecting goods of both nation in the region of hundreds of billions of dollars.
As such, Business Post analysts foresee the price of the Brent crude oil touching $62 per barrel this week, while the West Texas Intermediate is expected to hit $57 per barrel.
