Analysts Give Positive Outlook for Oil Market This Week

By Adedapo Adesanya 

Oil prices may continue to trend higher this new week as the trade war between the United States and China took a positive turn last week with an announcement last Friday (December 13) that the two countries have finally agreed to the phase one agreement after a 18-month trade war.

For the international benchmark, Brent Crude, this news spurred it to hit $65 per barrel while a barrel of West Texas Intermediate jumped above $60, the highest level since September 17 following the Saudi Aramco Attacks by Houthi Rebels.

It was gathered that China agreed to billions of dollars in agricultural purchases from the US, while President Donald Trump vowed not to pursue a new round of tariffs set for Sunday, December 15.

The signing of the partial deal between the two largest economies is set to take place in the first week of January.

Prices also saw major improvement following the results of the UK elections which offered support.

This was largely due to the uncertainty around Brexit which also weighed on prices but with the US and China trade conflict having a stronger effect, this took a backseat.

With Britain’s ruling Conservative Party winning a large majority in Thursday’s general election, Prime Minister Boris Johnson will go ahead to remove the country from the European Union by January 31, 2020.

Also, the decision of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies to extend oil cut to 1.7 million barrels per day till March 2020 so as to help curb oil glut is expected to support the oil market in the week. According to market analysts, the Brent has so far gained 21 percent since the December 6 meeting in Austria.

On oil glut fears, which may pull down oil prices, an OPEC’s research last week indicated that the oil market in 2020 may see a small supply deficit, although the International Energy Agency (IEA) predicted global inventories rising despite further cuts by the OPEC alliance.

There has been much fear for oil market surplus into the first six months of the year but with the cartel’s new information, investors don’t have to really worry about the likelihood of lower prices next year.

At this point, it looks very likely that we will continue to see a lot of rise this new week with Brent likely to extend to $67.50 level and the WTI around the $62 per barrel market if all things fall in place.